Questions regarding FHA guideline Changes.

Hope this helps answers some of the questions:

Maximum loan limit is $625,500 (Maximum loan amount varies by County)

* keep in mind the rate is slightly higher for loan amounts between $417,001 and $625,000 and be VERY careful as some Counties have much lower maximum loan limits*

*** The buyer’s minimum investment is now 3.5% of the sales price***

The 3.5% must all be a down payment. ( You always have at least a 3.5% down payments)  Plus any Pre-paid items or closing costs that are not covered by a Seller Credit.

MIP Has Changed

 The new upfront mortgage insurance premium is now 1.75% of the sales price.  The monthly MI is now .55

The monthly amount is reduced to .50 if the LTV is less than 95%  …..( FYI – it is .25% for a 15 year term above 95% LTV and there is no monthly MIP is the LTV is less than 95% and the term is 15 year)

FHA no longer requires “picky” repairs

This was always an obstacle when a Seller was debating FHA vs. Conventional contracts. Health and safety issues still must be addressed, including chipping & peeling paint on homes built prior to 1978.

FHA no longer requires certifications….NO termite, NO well, NO septic.  Certifications would only be required if the appraisal calls for them.

Also…

FHA 203K loan allows for financing of repairs/renovations –  this is a great tool to sell homes in need of repair.

FHA will now allow a Buyer to pay Lender Fees such as a Doc Prep Fee. – In the past Sellers were concerned those fees could only be paid by them.  The only lender fee the seller must pay is an $ 81 tax service fee

FHA allows a 6% seller credit towards buyers’ closing costs

FHA allows the buyer’s investment to be all gift funds

FHA accepts alternative credit.  Perfect for people with little or no established credit that would be reflected on a credit report.  Document 4 alternative credit references for a minimum of a 12 month history paid as agreed and your borrower is eligible for manual underwriting.

Citizenship is not required, but applicants must be legal residents of the US ( permanent or non-permanent resident aliens are permitted)

FHA allows non-occupant co-borrowers – (This non-occupant is often the primary wage earner, i.e. parents cosigning for their children)

FHA allows manual underwriting – this is important in the current environment to be able to help as many buyers as possible.