Monthly Archives: May 2009

FHA Title I Home Improvement Loans

Posted on by JT Miller

There’s a lot of confusion about Title I home improvement loans and what they really are, which is a shame because they’re one of the best forms of home improvement financing available. Did you know you could borrow up to $25,000 for under $200 a month…even if you don’t have no equity built up in your home?

There are misconceptions about how Title I loans for home improvements work and even what they can be used for. In this article we’re going to try to cover some of the more common questions about this home improvement loan program.

What is a Title I Home Improvement Loan?

The US Department of Housing and Urban Development (HUD) has created a home improvement loan program through the Federal Housing Administration (FHA) that can help homeowners fix up their homes, perform repairs on their house or even build on additions or non-residential buildings (such as a shed) on a piece of property that they own. The borrower must have a good credit history and be able to pay back the loan with monthly payments.

It’s important to note that an FHA Title I home improvement loan is not actually a loan or a grant directly from the government. Rather, HUD insures private lenders against the losses of these loans, which makes more local private lenders willing to give out these loans to homeowners. That means that when you apply for a Title I home improvement loan you’re actually applying for a loan through a private lending institution and not through HUD or the FHA.

Many local banks, credit unions, mortgage companies and other lending institutions are actually Title I lenders and you’ll still want to shop around with each to get the best loan for you. Even trustworthy online lending institutions like offer competitive FHA Title I Home Improvement Loans.

What kind of home improvements are covered with Title I Home Improvement Loans?

The home improvement project can be as small as adding some extra insulation to the attic to larger home projects such as replacing a roof, remodeling a kitchen, adding a bathroom, buying a new furnace or constructing a new room on your house. Single family Title I home improvement loans must be used to pay for structural or site changes, repairs or additions and cannot be used for luxury or extraneous items like swimming pools, hot tubs, barbecue pits or interior decorating. The improvements must also be part of the permanent structure and cannot be temporary in nature.

Multifamily structure home improvement loans can only be used for alterations and repairs.

What are the borrowing terms of a Title I Home Improvement Loan?

Here are he maximum home improvement loan amount and loan terms are based on the type of structure you’re improving:

  Maximum
Loan Amount		 Maximum
Loan Term
Single Family House $25,000 20 years
Manufactured House on
Permanent Foundation
(classified and taxed as real estate)		 $17,000 15 years
Manufactured House
(classified as personal property)		 $7,500 12 years
Multifamily Structure up to $12,000 per
living unit,
with a maximum of $60,000		 15 years

The interest rate of FHA Title I home improvement loans can vary from one location to another and even from one loan lender to another. The interest rate is usually a fixed rate that is mostly based on national loan interest rates at the time.

Want to really see the benefit of a Title I home improvement loan? If you were eligible to borrow that maximum of $25,000 with a 20 year term and an annual rate of 6% (that’s about the average loan rate these days) then your monthly payments would be a measly $179.11! That’s an incredible deal and it’s unlikely to be matched by any traditional home improvement loan or credit card offer!

What makes an FHA Title I Home Improvement Loan different from traditional home improvement loans?

First, no equity is required to apply for a Title I home improvement loan.

Second, the amount of money you can borrow can be dictated by the estimated value of your home after the improvements are done. This is especially helpful if you don’t have any equity in your home at the moment, but need to complete some home improvements to increase the value of your home.

Third, there are lower closer costs due to the lack of a need for an appraisal and the qualifications for applying for an FHA Title 1 loan are often less restrictive than conventional home improvement loans.

Forth, while most home improvement loans have a short loan term of only five years, an FHA Title 1 Home Improvement loan can have a repayment plan of up to 20 years with no penalty for paying the loan off early.

Are there any other eligibility restrictions for a Title 1 Home Improvement Loan?

There are only a few real restrictions beyond those listed above. If you’re in a “new construction” home then you have to have lived in the home for more than 90 days. Loan amounts over $7,500 are secured against the mortgage or deed of the property you are improving.

The bottom line: if you’re looking for a low interest home improvement loan that doesn’t require home equity, consider learning more or applying for an FHA Title I home improvement loan. Ready to get started? .

The Unconventional Neighborhood Home Improvement Loan

Posted on by JT Miller

There are lots of different ways to pay for home improvements, but some methods are more conventional than others. When most people think about financing their home improvements they often consider traditional means of borrowing money such as going to a bank for a secured home improvement loan or using a low interest home improvement credit card.

neighborhood home improvement loanIf, however, your financial situation doesn’t allow you to apply for those sorts of loans, and your home needs some sort of repair to keep it safe then you may want to consider a “good neighbor” home improvement loan.

Neighborhood loans for home improvements have been becoming more common as home prices fall people have lost most of the equity they have in their homes. The concept is simple: people helping people fix up their homes, either with direct help or by providing indirect support such as food or something else for trade.

Here’s a practical example of how a neighborhood home improvement loan would work: Let’s say you’re an elderly woman who needs to repair a leaky roof and maybe have some of your front landscaping thinned out. Instead of going to a bank or lending institution to try to borrow the thousands of dollars needed for these home improvements you could turn to some neighbors who may know how to repair the shingles on a roof and some able bodies who can tear out some bushes. In return for this service you might be able to offer some home cooked meals, knit a blanket or afghan or even offer to do some home cleaning for the people who are offering to help you.

If you don’t have any neighbors with the skills needed to improve your home, there is another way you can still finance your home improvements. You can offer to take out a personal loan from your neighbors and in return you can pay back the loan at a small interest rate, much lower than what a bank might charge. In this situation your neighbors get to make a little extra money with the interest charged and you get to improve your home at a much cheaper rate than what a traditional lending institution might charge. To be sure everything stays friendly, you should definitely speak with an attorney and probably have a written agreement drawn up.

This neighborhood home improvement loan is simply a smaller, and more local, version of what Lending Club is actually doing : sign up is free and easy, loan applications are quick and online and the interest rates are lower than most banks. You can read more about using LendingClub.com for a home improvement loan and see if the it’s for you. It’s essentially an internet version of a neighborhood loan. It’s people lending money to other people at a low interest rate.

Of course, when everyone in a neighborhood pitches in an helps another neighbor improve his or her home, everyong benefits. The nicer and more updated each home in the neighborhood is, the more everyone’s home is worth. By raising the value of one home, you in effect increase the value of all homes in the entire neighborhood. So loaning your neighbor help or money to update his or her home is actually like giving yourself a loan as well!