The Federal Housing Administration (FHA) makes it easier for consumers to obtain affordable home improvement loans by insuring loans made by private lenders to improve properties that meet certain requirements. This is one of HUD's most frequently used loan insurance products.
The Title I program insures loans to finance the light or moderate rehabilitation of properties, as well as the construction of non residential buildings on the property. This program may be used to insure such loans for up to 20 years on either single or multi family properties.
These are fixed rate loans, for which lenders charge interest at market rates. The interest rates are not subsidized by HUD, although some communities participate in local housing rehabilitation programs that provide reduced rate property improvement loans through Title I lenders.
Only lenders approved by HUD specifically for this program can make loans covered by Title I insurance. While most lenders and contractors use this program responsibly, HUD urges consumers to use caution in choosing and supervising home repair contractors conducting Title I repair/renovation work. A recent HUD review of Title I uncovered many instances of "unscrupulous contractors performing shoddy work, falsifying documents, overcharging homeowners, and using deceptive advertising." HUD encourages homeowners to work directly with their lender in selecting a home repair contractor in order to prevent inflated estimates.