HUD Archives: News Releases

HUD No. 05-143
Lemar Wooley
(202) 708-0685
For Release
October 12, 2005

FHA mortgage insurance available for displaced victims of Katrina and Rita

WASHINGTON - Housing and Urban Development Secretary Alphonso Jackson today announced that HUD has a mortgage financing program that requires no downpayment for people whose homes have been destroyed or damaged due to Hurricanes Katrina or Rita. In addition to requiring no downpayment, potential homeowners can live anywhere they choose in the United States.

"HUD is committed to helping people affected by these terrible disasters to re-establish their lives," Jackson said. "We want to give these families and individuals an opportunity to start over - as homeowners - whether they owned or rented their previous residences."

Under the special mortgage program, called Section 203(h), HUD, through the Federal Housing Administration (FHA), will insure mortgages for individuals or families in a Presidentially-declared disaster area whose residences were destroyed or damaged to such an extent that reconstruction or replacement is necessary.

Borrowers must be able to qualify for FHA mortgages, which are generally easier to qualify for than those on the private market, but they will not have to put any cash down to purchase the property. In addition, the FHA mortgage insurance premiums can be financed into the mortgage amount, so only minimal closing costs would be required.

An added benefit of the 203(h) mortgages, which are offered by any FHA-approved lender, is that they can be used anywhere in the U.S. For example, Katrina victims from Louisiana can choose to move wherever they wish. The limits on the size of the mortgage amount is up to $312, 895, depending on the average sales prices in the area.

For More Information on 203(h): contact a HUD-approved lender, the HUD National Servicing Center Hotline at: 1 (888) 297-8685, or HUD's websites: Internet and

  • NOTE: Section 203(h) fact sheet follows this release.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and


Mortgage Insurance for Disaster Victims Section 203(h)

Federal Housing Administration (FHA)
U.S. Department of Housing & Urban Development (HUD)

What is 203(h)?
Under the 203(h) program, FHA insures mortgages for victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Who is eligible for a Section 203(h) insured mortgage?
Individuals are eligible for this program if their home -- whether they owned their home or rented-- is located in an area designated by the President as a disaster area, and their home was damaged to such an extent that reconstruction or replacement is necessary. These individuals must be able to qualify for a mortgage through FHA's underwriting guidelines, which are generally more lenient than in the private sector.

How much down payment is required?
No down payment is required under the Section 203(h) program. Potential homeowners are eligible for 100 percent financing of the mortgage. The borrower will pay some closing costs, but often the seller and the lender pay a portion of these costs.

Are there any restrictions on the location of homes purchased under this program?
No, potential homebuyers who are eligible to participate in this program can purchase a home anywhere they wish in the United States. There are restrictions on the amount of the mortgage.

What is the maximum mortgage amount that FHA will insure?
The amount of the mortgage that HUD will insure ranges from $172,632 to $312,895 depending on the location of the property. Please check HUD's website for the most up to date FHA Mortgage limits in your area:

How much does FHA mortgage insurance cost ?
Borrowers pay an up-front insurance premium as well as monthly premiums. The up-front premium, 1.5% of the mortgage amount, and the monthly premiums, .5% of the mortgage amount, may both be added to the regular mortgage payment. So the borrower does not need to come up with any additional cash at closing to pay insurance premiums.

What are the benefits of FHA mortgage insurance?
Lenders are more willing to loan funds to borrowers with mortgages that are insured with FHA. Individuals who have had a financial setback and have problems qualifying for a mortgage in the private sector may qualify under FHA. More importantly, the lender is required to work with FHA borrowers that have been unable to make their mortgage payment for reasons such as job loss or illness. Under certain circumstances, FHA will make payment(s) on behalf of the homeowners so that they can keep their home. In exchange, the homeowner signs a note with FHA to cover those payments.

How can I apply for a FHA insured 203(h) mortgage?
The borrower must apply for an FHA insured mortgage within one year of the President's declaration of the disaster. Applications are made through an FHA approved lender. You can find a list of lenders online at HUD's website at:

For More Information on 203(h): Contact the HUD National Servicing Center Hotline at: 1 (888) 297-8685

What other Federal assistance is available to Disaster Victims?
Many federal agencies provide disaster assistance. If you are the victim of a disaster, you can find out what assistance is available by contacting the Federal Emergency Management Agency (FEMA) at: 1 (800) 621-FEMA (3362) (TTY: 1 (800) 462-7585) or visit FEMA on the web at:

HUD also offers insured mortgages outside of disaster areas for home purchase, refinancing, and reverse mortgage for seniors.

Visit HUD's website

Content Archived: May 04, 2010