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Update: As the housing market slows down and property values look uncertain, many more people are choosing to stay in the homes they already own and make improvements. Naturally any remodeling project can be expensive, but if you are in severe need of some home improvements then there are many different schemes you can take advantage of to get a loan. These loans are designed specifically to help homeowners make improvements to their properties.

If the equity in your home is limited, the answer may be an FHA Title I loan. Banks and other qualified lenders make these loans from their own funds, and FHA insures the lender against a possible loss. This loan insurance program is authorized by Title I of the National Housing Act.

FHA-insured Title I loans may be used for any improvements that will make your home basically more livable and useful. You can use them even for dishwashers, refrigerators, freezers, and ovens that are built into the house and not free-standing. You cannot use them for certain luxury-type items such as swimming pools or outdoor fireplaces, or to pay for work already done.

Title I loans can also be used to make improvements for accessibility to a disabled person such as remodeling kitchens and baths for wheelchair access, lowering kitchen cabinets, installing wider doors and exterior ramps, etc. Another use is energy conserving improvements or solar energy systems.

Improvements can be handled on a do-it-yourself basis or through a contractor or dealer. Your loan can be used to pay for the contractor’s materials and labor. If you do the work yourself, only the cost of materials may be financed.

Some of the advantages of the Title I loan insurance program are:

  • You do not have to live in any particular area to get one of these loans.
  • You seldom need any security for loans under $7,500 other than your signature on the note, and you need no cosigner.
  • You do not have to disturb any mortgage or deed of trust you may have on your home.
  • To obtain a loan, you only need to own the property or have a long-term lease on it; fill out a loan application that shows you are a good credit risk; and execute a note agreeing to repay the loan.
  • Your loan can cover architectural and engineering costs, building permit fees, title examination costs, appraisal fees, and inspection fees.
  • You are not hampered by a lot of red tape. Usually only the lender has to approve your loan, and can give you an answer in a few days. When the work is finished, you will need to furnish the lender with a completion certificate.
  • You receive some protection from the wrong kind of dealer, because FHA requires that any dealer who arranges a loan for you must first be approved by the lender.

Property Improvement Loan Program


Maximum Loan Amounts and Terms

HUD/FHA does not set the interest rate. Interest rates are negotiated between the borrower and the lender.

The maximum amount for a Single Family property improvement loan for the alteration, repair or improvement of an existing single family structure is $25,000 and the maximum term is 20 years.

The maximum amount for a property improvement loan for the alteration, repair or improvement of a Manufactured (Mobile) Home that qualifies as real property is $17,500 and the maximum term is 15 years.

The maximum amount for a property improvement loan for the alteration, repair, or improvement of an existing Manufactured (Mobile) Home classified as Personal Property is $7,500 and the maximum term is 12 years.

The maximum amount for a Multifamily Property Improvement loan for the alteration, repair, improvement or conversion of an existing structure used or to be used as a dwelling for two or more families is $60,000, but not more than $12,000 per dwelling unit and the maximum term is 20 years.

The maximum amount for a Nonresidential Property Improvement loan for the construction of a new nonresidential structure, or the alteration, repair, or improvement of an existing nonresidential structure is $25,000 and the maximum term is 20 years.

Finding a Lender

To find an FHA-approved lender in your area, call HUD’s Customer Service Center on our toll-free number: 1-800-767-7468 (TTY: 1-800- 877-8339) for a list of lenders in your State and additional copies of this brochure.

Complaints about contractor fraud under the Title I program can be made by calling our toll-free telephone line: 1-888-466-3487.

Equal Opportunity In Housing

The Fair Housing Act prohibits discrimination in housing and related transactions — including mortgages and home improvement loans. Lenders may not deny funds or offer less favorable terms and conditions in lending on the basis of the borrower’s race, color, religion, sex, national origin, familial status (i.e., the presence or number of children in a household) or disability. In addition, lending decisions may not be based on the race, color, sex, religion, national origin, familial status or disabilities of persons associated with the borrower or with the area surrounding the property. If you believe you have been the victim of discrimination in mortgage lending on one of the prohibited bases, you may file a fair housing complaint by contacting a local fair housing advocacy group, the Office of Human Rights for your state or local government, or by calling the national Fair Housing Hotline at 1-800-669-9777 (TTY: 1-800-927-9275).

(Reprinted from the Federal Citizen Information Center)