The 203(k) program allows a borrower to buy or refinance a damaged property and include the estimated cost of repairs in the mortgage (instead of obtaining a separate construction loan). Previously, renovations that changed a home’s foundation were ineligible, but recently the FHA announced that it was temporarily lifting that prohibition for homes in areas devastated by Sandy’s severe flooding, according to the Times.
Now, homes requiring elevation to reduce flood risk may qualify for 203(k) renovation loans. The rule change expires in March 2015 and applies only to primary homes, and to properties with foundations that lie below new flood elevation standards. Also, after repairs, the elevated foundation must comply with Federal Emergency Management Agency(FEMA) requirements and local building codes.
The Insurance Institute for Business & Home Safety (IBHS) provides information about determining your home’s flood zone and understanding flood maps on its website at http://www.disastersafety.org/flood/evaluating-flood-risk/.
Find additional resources to help you prepare for, respond to and recover from flooding at http://www.disastersafety.org/flood/prepare-respond-recover/.