How to Pay for Fire Damage Repair With No Insurance

On Jan. 7, devastating fires started in the Los Angeles area that destroyed over 12,000 homes, businesses and other structures. In July 2024, insurance company State Farm dropped about 1,600 policies in the Pacific Palisades. Other fire victims in Altadena and similar neighborhoods have reported being priced out of their policies or dropped by their insurers prior to the Jan. 7 fires.

Legally, you can own and rebuild a home without insurance — though if you have a mortgage or home equity loan, your lender will likely require insurance. Your mortgage lender may extend some flexibility or assistance following a fire, though rebuilding costs may surpass an existing home value.

With many homeowners now facing total loss or severe property damage without an insurance payout on the way, a combination of alternatives may help some to repair and rebuild. Here are nine potential ways to finance repairs.

The Federal Emergency Management Agency (FEMA) offers grants to those affected by disasters without insurance covering the damage. Grants can be used for basic home repairs, temporary housing and replacing personal property, such as vehicles, appliances and furniture. You can also use funds for medical care, child care, moving expenses and funeral expenses.

The maximum grant for disasters occurring on or after Oct. 1, 2023, is $42,500 per household. You can contact FEMA on the official website, via the FEMA app, at a disaster recovery center or by phone at 800-621-3362. You can also text “DRC” and your ZIP code to 43362.

The Federal Housing Administration (FHA) offers a program called Section 203(h) that insures mortgages for homeowners whose residences were damaged or destroyed by a disaster. Borrowers don’t have to make a down payment, though they will owe an insurance premium, which can be financed, and monthly premiums that add to the existing monthly mortgage payment.

There are limits on the dollar value of the mortgage. Currently, the nationwide maximum coverable mortgage for a single-family home is $1,209,750^[0]

The FHA also offers 203(k) loans, which allow you to combine rehabilitation costs with your mortgage. The U.S. Department of Housing and Urban Development (HUD), which oversees the FHA, is also placing a 90-day reprieve from foreclosures insured by the FHA — a proposed bill may extend this to 180 days.

The U.S. Small Business Administration (SBA) offers loans to repair or replace damaged homes, not just businesses. You can borrow up to $500,000 to finance construction or renovation and an additional $100,000 to replace personal property, such as clothing, furniture, vehicles and appliances.

Homeowners and renters alike can apply. The SBA can also refinance all or part of an existing mortgage in cases of significant disaster and lack of available credit. You can defer payment for the first 12 months, repayment terms can be up to 30 years, and interest rates won’t exceed 4%^[0]

You can apply for assistance on the SBA website. The deadline to file for physical damages after the Los Angeles fires is March 10, 2025, and the deadline for economic injury is Oct. 8, 2025.

Nonprofit organizations, from the national to the local level, can provide a wide range of support for disaster victims. In addition to food, temporary shelter and medical support, some organizations can help you rebuild or repair your home.

The American Red Cross, for example, reaches out directly to impacted families to offer financial assistance. You can also call 211, visit the American Red Cross website or call 800-339-6993 to apply for services from your local chapter.

Another example is the Salvation Army, which offers disaster services, including rent and utility assistance, along with other emergency financial assistance. You can find your local chapter on the Salvation Army website.

Many other local organizations, including religious organizations, may offer financial aid or other services.

Though a tax break may not cover the entire cost of rebuilding, it can help relieve some of the financial burden after a crisis. If your property was damaged or destroyed by the LA fires with losses over $10,000 of current market value, you can submit a claim for tax relief.

You can file an Application for Reassessment: Property Damaged or Destroyed by Misfortune or Calamity (M&C) Form ADS-820 with the Los Angeles County Assessor’s office within 12 months from the date the property was damaged or destroyed. You can download the forms on the Assessor’s office website, email [email protected] or call 213-974-8658 to ask questions or submit a claim.

Starting a personal fundraiser can be a more direct way to receive financial support after a crisis. The website GoFundMe allows you to tell your story, set a goal amount, and share the link widely for friends, family and strangers to support you. Even those with insurance may not receive payouts for months, so a personal fundraiser is a more immediate way to get help rebuilding sooner.

Keep in mind that FEMA can’t duplicate benefits, so make sure you’re not asking for help with the same specific expenses through GoFundMe as you requested from FEMA. For example, your GoFundMe can’t say, “I need funds to replace my car” if you applied for vehicle funds from FEMA.

A cash-out refinance lets you borrow some of your home equity while refinancing your mortgage. It’s a good option to finance minor damage or repairs if the new mortgage has a lower interest rate than your existing one.

According to mortgage organization Fannie Mae, you can use a limited cash-out refinance to fund disaster-related property damage. Fannie Mae also notes you may also be entitled to reimbursement of up to 10% of the loan balance or $15,000, whichever is lower, for out-of-pocket expenses covering the completed repairs of disaster-impacted property^[0]

Drawing equity from a damaged home is an option, depending on the amount of damage. If it’s completely destroyed, the appraised value of your property may not be high enough to use equity for rebuilding. If you have enough equity to use — at least 20% is required for most lenders — these are your two options:

• A home equity loan allows you to receive a lump sum payment and pay it back at a fixed interest rate over a period of about five to 30 years, depending on the loan’s terms. You’ll need to know the exact cost of repairs before opening a home equity loan.

• A home equity line of credit, or HELOC, works similarly, but it lets you access more cash over time. You’ll usually have 10 years to draw from the line of credit, during which time you only have to pay interest. After that, you pay both the principal and interest. However, a HELOC may be risky after a natural disaster, because interest rates are variable and property values could fluctuate.

Many lenders offer personal loans for home improvement projects, which can be a potential last resort in cases where you can’t borrow against your home equity. Personal loans can have higher interest rates than mortgages or SBA loans, but they also offer faster funding (within days, in some cases) than alternative options.

You’ll need good enough credit to qualify for a personal loan and the ability to repay the loan within the installment period, typically two to seven years. Personal loans work best when you know exactly how much your repairs will cost, which can be challenging in cases of severe damage.