A Title I Loans and Home Improvement Projects

by Francine L. Huff
Old House Web Columnist

Many homeowners don't have piles of cash sitting around to pay for renovations, so they turn to home improvement loans. One program that can help homeowners renovate an old house is the Title I loan and insurance program. Under the Title 1 program, the U.S. Department of Housing and Urban Development (HUD) insures home improvement loans made by private lenders.

Title 1 Loan Terms
HUD reports that it insured $101 million worth of home improvement loans under the Title I program in 2006. What makes the program appealing to many homeowners is that the terms of home improvement loans insured under Title I can be up to 20 years on single family or multifamily properties. The maximum amount homeowners can borrow for each single family property is $25,000. Owners of multifamily properties can borrow up to $12,000 per unit or a total of $60,000 for the entire building.

Eligible Home Improvements
Title I loans can be used for light-to-moderate renovations or to add nonresidential buildings to a property. Home improvement projects must protect or improve the livability or utility of a home. Title I loans also can be used to install fire safety equipment and preserve historic homes.

What Does It Take to Qualify?
Some homeowners choose Title I loans for home improvement projects because they often feature lower rates and fees, as well as less stringent underwriting standards. Title I loans don't require an appraisal, which can help keep closing costs down, and are not restricted to lower-income borrowers. Homeowners do not have to have any equity in their homes to borrow under the Title I loan program, unlike most traditional second mortgages.

Before taking on any home improvement loan it's important to understand all of the terms and make sure you can afford the monthly payments. You can get more information on Title I loans by checking directly with a HUD-approved lender or contractor.

Sources
U.S. Department of Housing and Urban Development

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