How Do I Qualify for an FHA Home Improvement Loan?

How Do I Qualify for an FHA Home Improvement Loan

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If your home is in need of repairs to make it more livable, such as improvements for energy efficiency or a new, more modern bathroom or kitchen, an FHA Title 1 loan is one option to help finance those repairs. While many borrowers opt for a home equity loan, an FHA Title 1 loan offers an option for those with little to no home equity. But, if no equity is required, how do you qualify for an FHA home improvement loan? While there is no hard credit score requirement and equity is not necessary, there are other broad requirements, such as a debt-to-income ratio under 45% and the home being your primary residence. Here we take a closer look to get a better understanding of the FHA Title 1 loan and other home repair loan options that may be available to you.

Key takeaways

  • FHA Title 1 loans are backed by the government but issued by private lenders for home improvements, up to $25,000 for single-family homes and $60,000 for multifamily properties.
  • Loan terms can vary, and interest rates are typically low, but insurance premiums are required at 1% annually.
  • Need primary residence, verifiable income, & debt-to-income ratio <45%. No equity required, unsecured loans available. Other options: Home Equity, USDA.

What are FHA Title 1 loans?

FHA Title 1 loans are loans backed by the federal government but issued by private lenders. These loans are designed to help low- to moderate-income homeowners finance necessary home improvements when they are unable to qualify for traditional home equity loans. These loans can be used for any modifications that help to make the home more livable and can include the purchase of new appliances. The maximum loan term is 20 years for single-family homes and 12 to 15 years for manufactured homes. The maximum loan amount is $25,000 for single-family homes and a maximum of $60,000 for multifamily properties.

How do FHA Title 1 home improvement loans work?

How a Title 1 Home loan works depends on the amount of the loan. For example, for minor renovation projects costing less than $7,500, your loan is typically unsecured, meaning should you default, you are not at risk of foreclosure. However, for single-family home loans over $7,500 and below the maximum of $25,000, the loan is secured by your home. Funds from these loans can only be used for repairs and additions that improve the living conditions of the home and cannot be used for luxury items, such as adding a new pool. Eligible improvements can include new appliances, disability accessibility improvements, energy-conserving improvements, and other improvements that substantially protect or improve the basic livability or utility of the property.

How do I qualify for an FHA home improvement loan?

Before you consider applying for an FHA Title 1 loan, you need to make sure that you meet the basic loan requirements. Some of these requirements include:

  1. Primary residence that you have resided in for at least 90 days before applying for the loan.
  2. While there is no minimum credit score required for this loan, you will undergo a credit check and must provide verifiable income.
  3. Debt-to-Income Ratio below 45%.
  4. Cannot be delinquent or in default of another federally guaranteed loan.

Pros and cons of FHA Title 1 loans

As with all loan options, there are pros and cons that you should consider before applying. While an FHA Title 1 loan is backed by the federal government, they are provided by individual lenders, so you may find different rates from different lenders, so it is important to shop around before accepting a loan. Here we highlight some of the main pros and cons associated with FHA Title 1 home improvement loans.


  • Minimum qualification requirements
  • No home equity is necessary
  • Unsecured loans available
  • Low, fixed interest rates


  • Insurance premiums are required at a 1% annual insurance premium on the amount borrowed.
  • Repairs are limited based on the loan spending limits
  • You must use an FHA-approved lender

Other options for home improvement loans

While an FHA Title 1 loan is a great option for many borrowers, it will not meet the needs of everyone. What is you your renovations exceed the $25,000 limit? What if you are looking to purchase a new home that requires additional renovations, and you want to finance both? If either of these scenarios sounds familiar, you may need to consider other home renovation loan options. These can include:

  • Fannie Mae HomeStyle® Loan
  • Freddie Mac CHOICERenovation or CHOICEReno eXPress Loans
  • FHA 203(k)
  • Home Equity Loan
  • Home Equity Line of Credit (HELOC)
  • USDA Rural Development Home Repair Loan

To learn more about these home improvement loan options, read “How to Get a Home Loan That Includes Renovation Costs?”

Navigating home improvement loans

The idea of home renovations, finding qualified contractors, and figuring out how to live in your home while renovations are underway can be stressful enough. Trying to navigate the home improvement loan process, however, doesn’t need to be that stressful.

At Hero Home Programs, our goal is to help people achieve homeownership in their dream home, and this includes helping people navigate the home improvement loan process. To learn how our team can help you find the home improvement loan that will meet your needs, contact us today.

Picture of Jacquelyn Sublett
Jacquelyn Sublett

I love teaching and writing on real estate, finance and mortgage topics. I find it fulfilling hearing stories of first time home buyers who we have helped with the home buying process. Writer for the Hero Homebuyer Programs™

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