FHA responds to Helene, Milton by issuing temporary waivers to rehab loan program

The Federal Housing Administration (FHA) this week announced two temporary policy waivers as the response to hurricanes Helene and Milton continues.

The FHA’s 203(k) rehabilitation mortgage program currently has a requirement that “when a repair is considered ‘major,’ it becomes ineligible to be financed” as part of the 203(k) limited option, ”if the repairs prevent the borrower from occupying the property for more than 15 days.”

This requirement has been temporarily dropped as part of the ongoing response to the back-to-back disasters in the Southeast.

As a result of Helene and/or Milton, “many properties were severely impacted or destroyed and are now in serious need of rehabilitation and/or repair,” the agency stated. “FHA believes a temporary waiver of its definition of ‘major repair’ related to the 15 days (or 30 days after November 4, 2024) needed for repair completion is crucial“ for ensuring that homeowners in these presidentially declared major disaster areas (PDMDAs) can rebuild.

The temporary waiver, issued on Monday, applies to FHA-insured limited 203(k) mortgages closed on or before Aug. 31, 2025.

Importantly, the temporary waiver impacts the 15-day occupancy requirement in the specified disaster areas, but a requirement that “at least one borrower resides in the property within 60 days remains the same,” FHA added.

Another policy applying to PDMDAs typically requires “damage inspection reports“ for properties in these areas. These reports must be done after the closure date of the “incident period” — the date(s) that a disaster took place on — or at least 14 days from the start of an incident period, whichever is sooner.

A new temporary waiver of a second 14-day incident period applies for inspection reports stemming from the Hurricane Milton disaster area, which was officially declared on Oct. 11.

But due to the responses to both Helene and Milton — which “severely impacted similar regions within a 14-day period” — the current policy requiring separate 14-day waiting periods for damage inspections and reports after each event “has created the potential for extensive repair/rehabilitation delays for homebuyers and sellers.”

Since the Federal Emergency Management Agency (FEMA) is currently deployed in these disaster areas, FHA believes there is “enough stability and risk mitigation to eliminate the requirement for a second 14-day waiting period for inspection and damage reports associated with the Hurricane Milton PDMDA.”

This waiver applies only to the 14-day requirement to conduct the damage inspection report. Other requirements — including the need to “conduct a damage inspection report, and other inspection and repair escrow requirements, for all properties with pending mortgages or endorsements in the PDMDAs” — remain the same.

The waivers announced this week are effective immediately.