Uninsurable Property


DEFINITION of '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.

  1. FHA 203(k) Loan

    A type of federally insured mortgage product for individuals ...
  2. Federal Home Loan Bank Act

    An act passed by the Hoover administration in 1932 that was designed ...
  3. U.S. Department of Housing and ...

    A U.S. government agency created in 1965 to support community ...
  4. Federal Home Loan Bank System - ...

    An organization created by the Federal Home Loan Bank Act of ...
  5. FHA Loan

    A mortgage issued by federally qualified lenders and insured ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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