Mortgage Insurance for Disaster Victims (203(h)

Written By: Glenn Michaels

Recently in the news were photographs of different locations in the United States that had an inordinate amount of rain resulting in flooding. In addition numerous tornadoes are hitting various places in the United States and we are now in hurricane season (June 1 to November 30)

If a location of the United States is declared a “presidentially declared federal disaster area” and the borrower’s home was materially damaged or destroyed the homeowner and/or tenant(s) can buy another dwelling using the 203(h) section of the act.

 This section of the act, 203(h) allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

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Through the 203(h), the federal government helps victims in presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re – establish themselves as homeowners.

 Type of Assistance

The program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified disaster victims. Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their home was either damaged or destroyed to such an extent that the reconstruction or replacement is necessary. The insured mortgage maybe used to purchase or reconstruct a one family home.  (1 – 4 family homes)

 ·       No down-payment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller up to 6% sales concession.

·       FHA Mortgage Insurance is not free. Mortgagees collect from the borrowers an upfront mortgage insurance premium which may be financed and monthly mortgage insurance that is not financed.

 ·       HUD sets limits on the amount that can be financed  and insured. The loan limits are the limits set by each county for an FHA loan.

 Eligible Participants

FHA approved lending institutions.

 Eligible Customers

Anyone whose home has been destroyed or severely damages in a presidentially declared disaster areas is eligible to apply.

 Borrowers have one year from the declaration (presidentially declared) to apply for the mortgage.

 Loans can be underwritten by lenders under the Direct Endorsement program.

About The Author

Glenn Michaels - As an NAMP® staff writer, Glenn Michaels is a mortgage underwriting instructor for Mortgage Underwriter University ( As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. If you're interested in becoming a writer for NAMP®, please email us at:



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