Mortgage Insurance for Members of the Armed Services (Section 222)
Section 222 enables members of the Coast Guard and National Oceanic and Atmospheric Administration on active duty to purchase a home that is partially subsidized by the respective service.Purpose:
The U.S. Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA) administers mortgage insurance programs that help low- and moderate-income families become homeowners by lowering some of the initial costs of their mortgage loans. FHA mortgage insurance also encourages lenders to make loans to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements. FHA insurance protects lenders against loan default on mortgages for properties-including manufactured homes, some health-related facilities, and single-family and multifamily properties-that meet certain minimum requirements.
The basic FHA mortgage insurance program is Mortgage Insurance for One- to Four-Family Homes (Section 203(b)). FHA administers a number of programs, based on Section 203(b), that have special features. One of these programs, Section 222, allows the Department of Transportation (DOT) and the Department of Commerce (DOC) to pay the FHA mortgage insurance premium on behalf of service members on active duty under their jurisdictions. The mortgages may finance single- family dwellings and condominiums insured under standard HUD home mortgage insurance programs.Type of Assistance:
For purchasers with a mortgage insured under Section 222, premiums are paid by DOT if the purchaser is in the Coast Guard or by DOC if she/he is an employee in the National Oceanic and Atmospheric Administration, as long as active duty status continues while she/he owns the home. The Department of Defense has suspended its participation in this program.
These insured loans may be used by members of the armed services who have been on active duty for two or more years to finance the purchase of an existing house or to build a new house. They may not use it to refinance a home they already own. FHA insurance on existing mortgages, insured under other HUD programs, may be transferred to Section 222 upon assumption by an eligible member of the service. The mortgage must cover a one-family dwelling located any place in the United States, Puerto Rico, Guam, the Trust Territory of the Pacific Islands, or the Virgin Islands.
In most other respects, Section 222 loans are similar to basic FHA-insured, single-family mortgage loans. First, down payment requirements can be low--3 percent or less--because FHA insurance allows a homebuyer to finance about 97 percent of the home's cost through the mortgage. Second, some closing costs can be financed, reducing up-front costs. Third, FHA limits some fees that lenders charge--for example, the loan origination charge. Fourth, FHA sets limits on the size of the mortgage loan, that vary with the cost of living and other factors (higher limits for two- to four-family properties).Eligible Lenders:
FHA-approved lending institutions, such as banks, mortgage companies, and savings and loan associations, can provide Section 222 insurance through HUD Field Offices.Eligible Customers:
Eligible service members who intended to use the mortgaged property as their primary residence could apply for Section 222 mortgage insurance.Application:
Applications are made through an FHA-approved lending institution, which in turn submits the application to the local HUD Field Office for approval. Borrowers can find FHA-approved lenders in a searchable list on HUD's home page.Technical Guidance:
This program is authorized under Section 222, National Housing Act (12 U.S.C. 1715m). It is administered by HUD's Office of Housing-Federal Housing Administration. Prospective lenders should contact the Director of Single Family Programs at the nearest HUD Field Office about participating in this program. Loan processing and administration for this and other FHA single-family mortgage insurance products are handled through one of three consolidated Single Family Homeownership Centers.For More Information:
To learn more about this program and other financing options, homebuyers should contact a HUD-approved lender, or a HUD-approved housing counseling agency (1-800-569-4287).