A home repair emergency can happen at any time. Estimates indicate that people in the United States spend approximately $300 billion per year on bills for home repairs and remodels. However, financing a home repair can seem like an insurmountable challenge for some people. When traditional banking and finance routes fail consumers, they can apply for loans and grants that are designated for repairs on single-family residences.
FHA 203(k) Loans
203(k) home improvement loans are loans that homeowners receive through traditional lenders that are approved by the Housing and Urban Development organization. These loans are backed by the FHA, or Federal Housing Authority, which means the lender assumes less risk if the homeowner defaults. Therefore, those who have blemishes on their credit may find it easier to qualify for a 203(k) loan than a traditional bank loan. This loan can even be combined with an FHA home purchase loan. Homeowners must borrow at least $5,000. However, those who need to tackle smaller repair projects can apply for a no-minimum streamlined 203(k) loan.
Section 504 Loans and Grants
The United States Department of Agriculture, or USDA, offers low-income homeowners a way to get money for home repairs when they cannot get approved for credit. To qualify for the USDA's Section 504 loans and grants for home repairs, the home must be located within a USDA-eligible boundary, and the homeowner must consider the house his primary residence. For a Section 504 loan, homeowners can receive up to $20,000. Section 504 grant recipients are awarded a maximum of $7,500. In some cases, an eligible homeowner can simultaneously receive a loan and a grant. With an interest rate of 1 percent and a 20-year repayment period, Section 504 loan terms are affordable.
Community Development Block Grant Program
HUD's Community Development Block Grant, or CDBG, gives grants to heavily populated counties and cities in an effort to improve neglected neighborhoods. The CDBG program does not directly distribute money to owners of single-family homes. Once HUD releases the CDBG funds to a city or county, that local jurisdiction allocates the money toward repair and improvement projects for homeowners who need assistance.
Habitat for Humanity Critical Home Repair Program
Although Habitat for Humanity is a household name that people associate with building homes for low-income families, many people are unaware that this organization also offers a home repair program. The Habitat for Humanity Critical Home Repair program gives interest-free loans to people whose homes have serious safety and structural issues. Eligible homeowners must live in the home, and they need to be current on their property taxes and mortgage payments.
HOME Program Grant Funds
Operating under the umbrella of HUD, the HOME Investment Partnerships Program gives grants to states and local communities. In turn, the jurisdiction that receives the federal grant funds disperses the money to owner-occupied households in order for homeowners to complete home rehabilitation and repair projects. Each year, the HOME Program allocates at least $1 billion toward improving the quality of housing among low-income families.
Indian Housing Block Grant Program
Federally-recognized Alaskan Native villages and American Indian tribes are eligible for the Indian Housing Block Grant, or IHBG, program. HUD gives these communities grants on an annual basis. Once the communities receive the grant money, they can determine how to spend the funds. To receive money for home repairs, families must not earn above the specified income cap, and they must meet other criteria.
The National Community Stabilization Trust, NeighborWorks America and Rebuilding Together are three well-known organizations that dedicate their efforts toward making homes safe. Through various funding sources, these nonprofit organizations revitalize and repair homes throughout the United States. Occasionally, these groups work in conjunction with corporations to repair single-family houses for people who are elderly, disabled or low-income.
State and Local Loans and Grants
Certain cities and states have home repair loans and grant that are earmarked for their residents. For instance, people who live in Detroit and have at least a 560 credit score may be eligible to borrow up to $25,000 without interest through the City of Detroit Planning and Development Department. Maine is another example of a local government entity that offers home repair funds. The Maine State Housing Authority gives grants to those who cannot afford to pay for major home repairs.
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