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FHA 203k Program for Flood Mitigation

June 27, 2014

On June 24, the FHA responded to a request from NAR and other groups, regarding the use of the 203k rehabilitation/renovation loan program for flood mitigation.

On June 24, the FHA responded to a request from NAR and other groups, regarding the use of the 203k rehabilitation/renovation loan program for flood mitigation.  In the letter, dated February 6, 2014, NAR and the coalition asked FHA to confirm the eligibility of the Federal Housing Administration's FHA Section 203k program for the rehabilitation of homes that have not been damaged in a flood, but are at risk of damage from future flood events.  The 203k has been used in flooded areas to rebuild homes, and the coalition wanted assurance that the program could be used for mitigation prior to a disaster.  In their response, FHA confirms that, "the mitigation of flood risk to an existing home either through relocation or elevation of the existing structure is permitted by the 203k program."  While the program has required the retention of the existing mortgage, following Superstorm Sandy, "FHA issued a waiver of the requirement that the existing foundation remain in place for eligibility under the 203k program through Mortgagee Letter 2013-36 for homes where the current foundation would not meet flood elevation requirement, local codes or FEMA requirements."

Using the 203k program may be a viable alternative for homeowners or prospective homebuyers to mitigation the flood risk on their home, and lowering their flood insurance costs.

Coalition letter to HUD

Mortgagee Letter 2013-36

HUD's 203k program