Page Reviewed / Updated - Apr. 2016
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 with the intention of making it easier for families to borrow money to make home modifications. To be clear, HUD does not subsidize these loans, which are commonly referred to as Title I loans, rather they provide insurance, enabling approved 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 to local communities and cities who 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.
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, perhaps to accommodate a wheelchair or re-do a bathroom with handrails and a seated shower or walk in tub. They 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.
As these loans are made by private lenders, most eligibility requirements are 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. The loan can be used to pay for any improvement to the safety, livability, or utility of the property.
These loans are made by private lenders that charge market rates for their loans. The maximum length for the loan term ranges from 12 to 20 years.