The Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development, better known as HUD, insures loans made by private lenders against consumer default. This is done with the intention of making it easier for families to borrow money to make home modifications, which can enable a frail senior to age at home, rather than in an institution. To be clear, HUD does not subsidize these loans, which are commonly referred to as Title I loans, rather they provide insurance, enabling approved private lenders to offer loans to individuals with a wider range of credit scores who might otherwise not be eligible.
It is worth noting that HUD also provides Community Development Block Grants (CDBG) to local communities and cities that may, in turn, make those funds available in the form of grants to eligible seniors. However, should such a program exist, it would be managed at the local level. Find your local HUD office.
If conducting further research on this option, one should be aware that HUD Property Improvement Loans are also referred to as FHA Loans, Federal Housing Authority Loans, and / or the Title I Insurance Program.
Using HUD Loans to Help Aging in Place
HUD Property Improvement loans are best suited for families that wish to have an elderly loved one move onto their property instead of as a loan to the individual that requires care directly. The reason for this is that seniors in poor health with fixed incomes are less than ideal candidates for these loans, as they have limited ability to re-pay them.
In the context of long-term care for the elderly, these loans are often used to make a home more accessible for frail individuals. One might widen the doorways and add a front door ramp to accommodate a wheelchair, or one might re-do a bathroom with handrails and a seated shower or walk in tub. These loans can also be used to build an accessory apartment that would enable an elderly relative to live on the property of their adult children or caregivers.
Did You Know? Seniors and their family members are eligible for a free estimate for bathroom safety modifications. Get started here.
HUD Property Improvement Loans Qualifications and Limits
Since private lenders provide these loans, eligibility requirements are generally specific to the lender and the market in which the loan is provided. However, HUD does mandate that to qualify, the borrower must either own the property or have a lease that extends six months beyond the loan repayment date.
Consumers can borrow up to $25,000 for improvements to a single-family home. Residents of multi-family units, such as an apartment building, may borrow up to $12,000 per family unit. (There is a maximum $60,000 loan amount for the structure). The loan can be used to pay for any improvement to the safety, livability, or utility of the property.
According to the AARP, more than 85% of seniors aged 65 and over want to age at home or in their community.
Costs and Fees
As mentioned previously, private lenders provide these loans, for which they charge market rates. The maximum length for the loan term is 20 years.
How to Apply
One must apply for a Title 1 loan through a HUD approved lender. On the HUD webpage, one can find a HUD approved lender by using the search tool. More information about this program is available here.