Opportunity Zone Buyers Get More FHA Loan Remodeling Money
WASHINGTON – U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson announced that the Federal Housing Administration (FHA) will offer a new incentive for borrowers rehabilitating homes in Opportunity Zones.
To make home purchases within Opportunity Zones more attractive, FHA is expanding its Limited 203(k) Rehabilitation Mortgage Insurance Program for Opportunity Zone homes. The loans roll the cost of repairs into a single mortgage and are offered to owner-occupant homebuyers and existing occupant homeowners for the purchase and/or rehabilitation of single family homes.)
The FHA loan upgrade becomes effective on Dec. 16, 2019. After that, qualified borrowers can roll an additional $50,000 into their first mortgage – a $15,000 increase over the current cap.
“Providing this opportunity means that the families seeking affordable homeownership or to improve their homes in distressed neighborhoods – where rehabilitation is needed the most – have a path to financing that makes it realistic to do the repairs and improvements that will uplift the entire community,” says Carson.
Allowable improvements include connecting to public water and sewage systems, repairing or replacing plumbing, heating, air conditioning or electrical systems, and covering lead-based paint stabilization costs.
As of Sept. 30, 2019, FHA had active insurance on over 623,000 mortgages located in Opportunity Zones, or 8% of FHA-insured mortgages nationwide.
The new incentive announced today is limited, however, to the first 15,000 mortgages secured by properties in Qualified Opportunity Zones each calendar year. The incentive expires on Dec. 31, 2028.
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