Sunday, October 24, 2010

FHA Quick Reference Guide

Need a Quick Reference Guide for FHA Loans? Here you go.

Down Payment and Seller Concessions
-- 3.5% down
-- A relative can either GIVE the money to the borrower or LEND the money to the borrower
-- 6% seller concessions are allowed

Declining Market Restrictions
-- FHA does NOT have declining market restrictions

Borrower Eligibility
-- NOT limited to first time homebuyers
-- NO income limitations
-- Non-occupying co-borrowers are allowed (occupying borrower does not need any income to qualify)

Occupancy Requirements
-- Primary residences for maximum financing
-- 2, 3, and 4 units properties are allowed, as long as one unit is occupied by the borrower
-- Two FHA loans to the same borrower are OK, but they need 25% equity in the first property

Maximum Loan Size
-- Varies by county
-- The maximum loan size is $406,250 in Metro-Denver counties; Boulder County is $460,000
-- Loan size is higher for 2, 3, and 4 family units

Credit Requirements
-- Each lender has their own minimum credit score – typically 640
-- Non-traditional credit is OK (need 3 trade lines verified for the past 12 months)
-- Bankruptcy – Chapter 7 is 2 years from the discharge date, Chapter 13 is 1 year of timely payments
-- Foreclosure – 3 years from the recording date of the Public Trustee’s Deed
-- Short Sales – no waiting period if the mortgage was not delinquent at the time of the short sale, 3 years if the mortgage was delinquent – (other restrictions may apply – call us for details)
-- Collection accounts do NOT have to be paid

Mortgage Insurance
-- 1% up-front mortgage insurance premium is required, but it can be financed into the loan
-- Monthly mortgage insurance premium is based on a 0.90% annual rate (for most FHA loans)

Appraisals
-- They are NOT any more restrictive than conventional appraisals (safety issues must be addressed)

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