Low Income Home Improvement Loans

Low income home improvement loans, also known as renovation loans or housing repair loans, are used to pay for the repair, remodeling, or renovation of the property. These loans may be applied for separately after a property has been purchased, or they may be included as a part of the original mortgage during the property closing. Although it may be difficult for individuals with bad credit or low income to obtain approval for home improvement loans independently, there are plenty of government-sponsored programs, private lenders, financial institutions, and local nonprofit organizations that offer assistance in obtaining low income home improvement loans. The following paragraphs discuss low income home improvement loans, how to qualify for them, what they can be used for, and the various types available.

How to Qualify for Low Income Home Improvement Loans
Although the exact eligibility requirements vary between each lender, usually the applicant will need to fall under a certain median income bracket. In other words, if a lender is offering a 30% median income home improvement loan, this would mean that the applicant cannot make more than 30% of the current median income of their geographical region (which may be the county, city, or state they reside in, depending on the lender’s preferences). Senior citizens and individuals with disabilities may also qualify for low income home improvement loans, especially if they are currently receiving fixed incomes such as Social Security or disability payments. Most loans that are offered to senior citizens and people with disabilities are granted so that the property can be made more accessible and user-friendly to disabled and elderly individuals. If you are unsure whether you are eligible for low income home improvement loans, you may want to contact HUD (Department of Housing and Urban Development) to inquire.

What Can Low Income Home Improvement Loans Be Used for?
Although some low income home improvement loans can be used for any type of renovation on the property, most are reserved for the rehabilitation of the property’s interior, and are only granted so that the property can be restored to meet the minimal standard of living according to local building code. In most cases, if you’d like to add additional square footage to the property or improve its aesthetic appearance (i.e. – landscaping or adding rooms) you would need a conventional home improvement loan or construction loan offered by a commercial lender. Unfortunately, individuals with low income or bad credit are rarely approved for such loans, and are therefore limited to low income home improvement loans, which can only be used to restore properties to inhabitable and functional standards. In basic terms, if you’re planned project is related to repairs that are essential to the safety and functionality of the property, you should be able to use a low income home improvement loan to pay for the project.

Types of Low Income Home Improvement Loans
Most low income home improvement loans are simply conventional loans that are federally insured and offered by lenders that participate in government loan programs. These loans are typically backed by the FHA (Federal Housing Authority) or HUD and offer basic financial assistance for home repair. However, HUD also offers disaster loans that allow homeowners to immediately repair damage caused by natural disasters, which may pose significant safety hazards. For example, these loans may be offered to property owners that live in an area that was devastated by a hurricane or earthquake. Disaster loans typically carry much lower interest rates and lenient terms than conventional loans and other low income home improvement loans.