FHA Loan Articles
Does FHA Offer Sweat Equity Grants to Homeowners?When considering your options for an FHA home loan, one alternative to a typical home loan is the FHA fixer-upper loan. Some like the challenge of remodeling a home they can buy for less than the cost of a more "perfect" new purchase home.
Those looking for home loans for fixer-uppers or even HUD REO properties may be curious about grant money available for home repairs. There are HUD press releases which discuss such FHA/HUD money and the latest disbursements to state and local agencies. Can an FHA borrower get some of this sweat equity grant money directly from the FHA or HUD?
The short answer is no.
FHA press releases like a recent item about the FHA awarding $27 million in "sweat equity grants", (HUD Press Release No. 11-122), include a fact FHA borrowers should pay close attention to--these HUD grants are awarded to organizations such as Habitat For Humanity or the Tierra del Sol Corporation. These two agencies were both recipients of federal funds via the Self-Help Home Ownership Opportunity Fund (SHOP).
According to the FHA press release, "The SHOP program provides federal grants on a competitive basis to national and regional nonprofit organizations and consortia that have experience in administering self-help housing programs."
Individuals looking for grant money to repair or remodel a home may be able to apply for grant money as part of a state or local program, but the FHA does not disburse it directly to home owners. It provides funds to the organizations, which then administer the money as part of the state or local program.
The FHA provides additional information about such programs.
There's a difference between an FHA grant for home improvements and FHA loans for home improvements. The FHA will insure different types of loans for fixer-upper properties, HUD home purchases, and standard upgrades and/or improvements to a property when purchased with an FHA home loan.
Consider the FHA 203 (k) Rehabilitation mortgage for such purposes or explore the FHA official site.