What is 'Uninsurable Property'
A home that is not eligible for insurance through the United States' Federal Housing Administration (FHA) because it is in need of extensive repairs. An uninsurable property is typically ineligible for a mortgage through the FHA; however, in certain cases, the individual purchasing the home may qualify for alternative FHA financing options.
BREAKING DOWN 'Uninsurable Property'
United States Department of Housing and Urban Development (HUD) homes must be appraised and inspected before they can be listed for bidding. The homes typically fall into one of three categories: insurable, insurable with repair escrow or uninsurable. Any HUD home that is uninsurable will generally have to secure other-than-FHA financing. In certain instances, however, HUD will provide financing for the purchase of an uninsurable property through its FHA 203k loan financing program. These are rehab mortgages where the lender rolls the repairs costs into the mortgage. These homes usually sell at a large discount, and are not offered through conventional financing because of their condition.