Date: Dec. 23, 2024
From: Charlotte County Community Development
Subject: New FHA/HUD Financing Rules for Homes in Flood Zones
Starting January 1, 2025, new minimum property standards will go into effect for those purchasing new homes with Federal Housing Administration (FHA) loans located in Special Flood Hazard Areas (SFHAs). To qualify for FHA financing: the lowest floor must be at least two feet above the base flood elevation, also known as a “2-foot freeboard” requirement. These standards will also apply to U.S. Department of Housing and Urban Development’s (HUD) low-rent public housing programs, ensuring that federally financed homes are more resilient to flooding.
Among the many programs offered by HUD, FHA loans stand out as one of the most far-reaching and impactful. These loans, which are insured by the FHA, help make homeownership accessible by backing mortgages issued by FHA-approved private lenders.
FHA loans are an important resource for homebuyers nationwide. In its Fiscal Year 2023 report, FHA reported endorsing 580,000 home purchase loans through its forward mortgage program, with more than 82% going to first-time homebuyers. The total value of all endorsed forward mortgages — covering both home purchases and refinances — reached $208 billion.
FHA financing represents a significant source of financing for first-time homebuyers and is therefore important in nearly all communities. But what happens if a newly built or purchased home doesn’t meet HUD’s minimum property standards? It won’t qualify for an FHA mortgage.
The Charlotte County Community Development Department encourages residents to stay informed about these changes. While the department does not enforce lender requirements or regulations, homebuyers should consult with contractors, realtors, lending or insurance professionals to understand how these updates might impact their plans. For more information, please visit http://www.hud.gov/program_offices/comm_planning/environment_energy/ffrms/faqs.
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