Home Improvement Loan (Title I)

A Title I home improvement loan may also be used in connection with a 203k Rehab Mortgage.


Title I Loan Description

A Title I home improvement loan (also called a Title I property improvement loan) is a loan made by private lenders that is insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD).

Title I loans may be used to finance permanent home improvements, rehabilitation, building alterations or repairs that protect or improve the basic livability or utility of the property -- including single-family and multifamily homes, manufactured (mobile) homes, nonresidential structures, and the preservation of historic homes.

These home improvement loans may be used for any property improvements, large or small, that will make your home more livable and useful. You can even use them for dishwashers, refrigerators, freezers, and ovens that are built into the house and not free-standing. The loans can be used for fire safety equipment, energy conserving improvements, or solar energy systems.  Borrowers may also use the loans 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.

In addition, loans on single family homes may be used for site improvements, as well as the construction of nonresidential buildings on the property. However, you cannot use these loans for certain luxury-type items such as swimming pools or outdoor fireplaces, or to pay for work already done.

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 home improvement loan 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 unscrupulous dealers, because FHA requires that any dealer who arranges a loan for you must first be approved by the lender. 

Borrower Eligibility

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.

The applicant must have a good credit history and the ability to repay the loan in regular monthly payments.

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