Special loans help flood victims get new mortgage with no money down

HOUSTON – If your home or even your apartment flooded and you need a long-term place to live, there are special disaster assistance loans that can help. 

It could be weeks, even months before many flooded homes are repaired and livable again. Some homeowners may not be able to bear the thought of cleaning up and starting over after another possible flood next year or five years from now.

For those families, Steve Kyles with Legacy Mutual Mortgage said there is a special disaster mortgage loan that will let them buy a new home with 100 percent financing, no money up front. 

"It's very rare in today's market that you can buy a home with no money down," explained Kyles. "Usually it's reserved for a veteran or a rural loan program."

To qualify for a 203H loan, your home must be in one of the 39 Texas counties declared disaster areas by the president. Your home, even if you were only renting, must be unlivable. The 203H loan does not count your existing mortgage against you when determining if you qualify.

"The reason why that's significant is they don't have to qualify for two home payments," Kyles said. 

There is also a home improvement loan for flood victims who have equity in their homes but need money to pay for repairs. The loan lets homeowners in disaster areas refinance their homes. They get the cash to pay contractors and then roll that loan into their monthly mortgage payment. 

"If you did traditional cash-out refinancing, the home has to be in livable condition," Kyles said, explaining why the disaster home improvement loan is different than a traditional refinance. "This program is designed to give you money without the home being in livable condition." 

Only FHA-approved lenders offer these special disaster loans. Interest rates are consistent with other FHA loans. Depending on your credit score and the amount of your loan, you can get a mortgage with an interest rate in the low 4 percent range.