Business Solutions

Finding Home Access Funding

• By David Kopf
• May 01, 2014

Funding home access is a crucial element of the process for providers. For the most part, home access is not a funded item, which means that the transaction will be largely retail. Moreover, the kinds of home access items that mobility patients needs, such as vertical platforms, can get somewhat expensive.

And major home remodeling projects can involve even more money. In fact, the construction costs associated with remodeling and reconstruction projects can cost as much as 12 percent higher for an accessible home as a standard home.

This becomes especially important when you start to consider the means available to mobility patients. Many patients that need serious home access overhauls do not necessarily have the income to pay for such major projects, because often their condition can impact their earning power. According to some studies, as many as one third of disabled patients live at or below the poverty line and might not qualify for home loans. In this case, there are special loan programs and other forms of funding that can help them attain the home access services the need.

So how to patients pay for these costs? Providers should have some answers. Any HME business that wants to offer home access services to mobility patients should have start determining what resources are available to help their patients and make sure to have them on tap.

First off, there are special grants and other options outside of true financing solutions. For instance, the Department of Veterans Affairs (VA) offers its Home Improvement and Structural Alterations and Special Home Adaptations grants for disabled veterans. Many state Medicaid programs offer home and community-based waivers that can help fund accessibility modifications.

Also, local grant programs can sometimes help. Often area charitable organizations will provide financial help to those who qualify. Local or area Muscular Dystrophy Associations often keep lists of these sorts of organizations, and can help providers better understand the grants available.

For patients that don’t need financial assistance, providers should build relationships with lending professionals that have a solid understanding of special local, state and national lending programs from commercial and government sources that are geared toward helping patients finance their home access modifications and construction. These partners will not only help their patients and help generate the funding necessary to drive a home access project, but they can also become key referral partners that will use their marketing resources and their reputation to help drive business back to the provider.

A good example of loans that can help cover home access upgrades would be the Fannie Mae Community HomeChoice is available to patients living on their own or someone living with a disabled family member to help them purchase an accessible home, or upgrade their existing home for home access. The loan is designed specifically for borrowers with low to moderate incomes, and offers flexibility in terms of loan-to-value ratios, down payment sources, qualifying ratios and the establishment of credit.

Another option would be state-level loan programs. Nearly every state in the unions has created loan programs to help lower income borrowers with disabilities tap into lending options that offer very agreeable terms at rates and terms well below traditional home loans. Many do this by providing tax-exempt mortgage revenue bonds to local lenders, who then work with the patients needing financing. Make sure to study the programs offered by the state housing finance agencies and development agencies for the states where you provide services.

For patients that are buying a new home, they might want to consider the 203(k) loan program. The Federal Housing Administration created the 203(k) loan specifically to help homebuyers rehabilitate homes they wish to purchase to live in, but that are in disrepair. A 203(k) loan lets a qualified borrower not only finance the purchase price of the home, but also include the price of the necessary repairs to the home. And this includes home access upgrades.

There are two types of 203(k) loans, and the one that is right for your intended property depends on how much work needs to be done:

A “streamlined” 203(k) loan is intended for a home that requires only non-structural repairs.

A “regular” 203(k) loan is for properties that require structural repair, such as replacing the roof or a load-bearing wall.

A streamlined 203(k) provides up to $35,000 that can be added to the loan to cover the improvements, in addition to the purchase price of the home. For a regular 203(k), the homeowner can borrow the purchase price of the home, plus the price of the improvements, up to 110 percent of the home’s expected value after the improvements.

The money for the improvements is actually put into an escrow account that is used to pay for materials and the companies being contracted to do the home access work, such as the provider and its partners. Construction must begin within 30 days of the close of the loan and your work must be completed within six months.

To ensure the patient still has a place to live, borrowers can finance up to six months’ mortgage payments in a 203(k) loan.

This article originally appeared in the May 2014 issue of HME Business.