Homeowners who need to make changes to their homes can take advantage of a Federal Home Improvement Loan as long as they fulfil certain conditions. It is also referred to as a 203(k) loan, and must be applied for through a private lender. This can make life a lot easier. In Naples, renovations are a large part of any contractors workload, and that may increase if people take up this loan offer.

The loan is offered by the Department of Housing and Urban Development to help householders pay for home improvements. The loans are administered by private banks and other organizations but are underwritten by the government. In the large part these loans are for critical structural improvements or repairs, but can be used to improve or renovate a home if for example a family was outgrowing it and couldn’t afford to move.

The main three qualifications for the loan are; the home must be a family home of up to four families, needs to be older than one year old, and the loan can’t be for over 100% of the increase in value the improvement would provide. This means if the loan was for $10,000, the improvements will need to add at least that $10,000 to the market value of your home. If these three criteria are fulfilled then it is likely that you could get one of these loans in order to complete work on your house.

No matter how much the loan is for, the Department of Urban Development underwrites it for $25,000 in case you have problems paying it back. The amount you borrow can vary but needs to be a minimum of $5000 and be for something more serious than a makeover.

In the majority of cases the loan will pay for repairs to structural damage, the removal of health hazards like lead pipes or asbestos, energy conservation, disable access and major landscape works. The main caveat with this loan is that whatever work it pays for will need to be started within 30 days of the loan being paid. The work must be as continuous as possible, not break for longer than 30 days and be completed within six months.

The idea behind it is to allow homeowners to continue or improve their way of life while not having to turn to expensive lenders, or be put in the position of not being able to borrow the money normally because of the economic situation. Although the loans are acquired through lenders, they are controlled and underwritten by the government and the interest rates are fixed. The lenders are amenable to this though as they get a fee from the government for each loan of this type they approve.

As long as you fulfil the requirements already listed you should have no problem being approved for one of these loans. I would encourage everyone who wants one and can afford to pay for it to get one. Commercial interest rates are much higher at the moment so there is little point getting a home loan any other way.