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Title I Home Improvement Loan

Mortgage Library: Title I Home Improvement Loan

Under the Title I program, approved lenders make loans from their own funds to eligible borrowers to finance home improvements, and HUD insures the lender against loss if the borrower defaults. Credit is granted based on the applicant's credit history and ability to repay the loan in regular monthly payments. This is one of HUD's most frequently used loan insurance products.

Title I home improvement loans are not government loans or grants, and are not low interest rate loans. HUD does not lend money nor regulate interest rates.

Purpose And Eligible Improvements

Title I loans may be used to finance permanent home improvements that protect or improve the basic livability or utility of the property--including manufactured homes, single-family and multifamily homes, nonresidential structures, and the preservation of historic homes. The loans can also be used for fire safety equipment.

Most of the loans are for items that provide structural additions and alterations, exterior and interior finishing, roofing, insulation, and heating and cooling systems. The funds cannot be used for "luxury" items, such as swimming pools or hot tubs. They also cannot be used for debt consolidation, cash-out, or any non-home related expenses.

Title I Home Improvement loans on single family houses may be used for alterations, repairs and for site improvements. Loans on multifamily structures may be used only for building alteration and repairs. Structure must have been completed and occupied for 90 days.

Interest Rates

The interest rate is a fixed rate that is generally based on the prevailing market rate in the area at time the loan is made. It is negotiable, and may vary between lenders.

Some communities participate in local housing rehabilitation programs that provide reduced-rate property improvement loans through Title I lenders.

Maximum Loan Amount

Single family house $25,000
Manufactured home on permanent foundation that qualifies as real property $17,500
Manufactured (mobile) home classified as personal property $5,000
Multifamily building $12,000 per unit with a total of $60,000

Maximum Loan Term

Single family house and multifamily structure 20 years
Manufactured home on permanent foundation that qualifies as real property 15 years
Manufactured (mobile) home classified as personal property 12 years

Prepayment Penalty

There is no prepayment penalty.

Eligibility Requirements

Eligible borrowers include the owner of the property to be improved, the person leasing the property (provided that the lease will extend at least 6 months beyond the date when the loan must be repaid), or someone purchasing the property under a land installment contract.

If the loan is over $15,000 and the property is not owner-occupied, the borrower must have equity in the property equal to the loan amount.

Any loan over $7,500 must be secured by a mortgage or deed of trust on the property.

How to Apply For A Title I Home Improvement Loan

A property owner may apply at any lender (bank, mortgage company, savings and loan association, credit union) that is approved to make Title I loans.

For more information about how to obtain Title I Home Improvement loan, please contact FHA's Home Improvement Insurance Branch or a Title I-approved lender.

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