My client who is selling their home has an FHA loan that is assumable. How do we know if the new buyer can assume it?
The current note holder/mortgagee needs to contact the Assumption call center at 800-340-0570 to request an Assumption package, which is essentially the package they would provide to the potential new home buyer of their home.
The new buyer must meet current FHA guidelines (600 min.score/ 41 back ratio, standard income/credit/qualifying), owner occupied only. Property is not underwritten, only the new borrower.
No minimum down payment is required, but if the seller has equity that he is entitled, the new borrower must find that money to pay him/her from their own/outside sources. Fees? Credit report, flood, and assumption fee (usually about $500) Plus title fees, but no ALTA is required. Purchaser may want to purchase an owner's policy. Turn time? 45-60 days (min. 3 weeks). The worse the credit, and the more disorganized and non-responsive the new borrower is to requested additional information or incomplete application/package, the longer it takes to close.
Knowing the value of FHA and the assumability of the loan is one of the most unique and valuable elements of the program!