'FHA' Category
A Few FHA Financing Questions and Answers
April 8th, 2010 Categories: FHA, Mortgage News
I was asked the following questions regarding FHA insured financing this past week and thought that the answers were worth sharing:
Q: Are modular homes treated in the same manner as manufactured homes?
A: Fortunately, no. Modular construction is also a factory-built home, but is treated the same as stick-built housing.
Q: Can the Upfront Mortgage Insurance Premium (UFMIP) be paid in cash or must it be financed into the loan?
A: The UFMIP must be either entirely financed into the mortgage or paid entirely in cash. Along those same lines, a seller concession may be used to pay for the UFMIP, but the concession must cover the full amount. As of 4/5/2010, the UFMIP is 2.25% of the base loan amount (purchase price minus down payment).
Speaking of seller concessions, currently there is a maximum of 6%. At some point this summer, it will be lowered to 3%.
Q: Is it acceptable to get a loan for the down payment?
A: Yes. Funds can be borrowed for the total required investment as long as satisfactory evidence is provided that the funds are fully secured by investment accounts or real property. This includes stocks, bonds, real estate (other than the property being purchased).
In addition, certain types of loans secured against deposited funds (401k, cash value of life insurance, etc) do not require consideration of repayment for qualifying purposes.
Q: Can gift funds come from an employer?
A: Yes, gift funds may come from the borrower’s employer. However, the gift donor may not be a person or entity with an interest in the sale transaction. Salary advances are considered unsecured loans and are therefore not an acceptable source of funds for closing.
Q: Are the debts of a non-purchasing spouse required to be included in the debt-to-income ratios?
A: Yes, in community property states such as California. However, the non-purchasing spouse’s credit scores are not factored into the loan decision.
Gone are the days when you could remove an unemployed spouse from the loan because they had a large car payment, but no income. Keep in mind that if the non-purchasing spouse refuses to give consent for the credit report then the loan will not be eligible for FHA insured financing.
Q: Is a borrower eligible if they have delinquent Federal debt?
A: If the borrower is presently delinquent on any Federal debt (VA-guaranteed mortgage, Title I loan, Federal student loan, SBA loan, delinquent Federal taxes), then they are not eligible for FHA insured financing until the debt is brought current, paid or otherwise satisfied.
Q: Can an FHA appraisal be transferred between lenders?
A: Yes. When a borrower has switched lenders, the first lender must transfer the FHA case number and appraisal to the second lender upon borrower request. FHA does not require that the lender name on the appraisal be changed when it is transferred to another lender.
Sometimes, a deal will fall out of escrow due to a particular lender’s overlays, i.e., tighter guidelines than actually required by FHA. This way, the buyer can switch lenders and not be forced to pay for a 2nd appraisal.
For More Information Contact Kevin Kueneke below:
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Financing: So What Is The Minimum Downpayment?
March 19th, 2010 Categories: FHA, Mortgage News, Real Estate News, VA Loans
There are three types of financing: FHA, VA, and Conventional. Conventional has three subsets: Conforming, High Balance Conforming, and Jumbo. A question I have been asked frequently these days is, “So what is the minimum down payment?” 
FHA:
For purchase prices up to $722,750 in San Diego County, the minimum down payment is only 3.5%, all of which can come from a gift. There is upfront mortgage insurance charged by the FHA of 1.75% of the base loan amount (going to 2.25% effective 4/5/2010) and a monthly mortgage insurance premium. If a buyer puts 5% or more down, the monthly mortgage insurance premium factor is lower.
VA:
For purchase prices up to $437,500 in San Diego County, the minimum down payment is Zero. Larger VA loans are available, but there will be a required down payment all of which can be a gift. I have attached a chart showing the VA down payment amounts for several purchase prices. VA loans do not have mortgage insurance, however, VA does charge a Funding Fee of 2.15% for 1st time use and 3.30% for subsequent usage. Veterans with a service-related disability are exempt from the VA Funding Fee.
Conventional:
· Conforming loans up to $417,000. The minimum down payment is 5% for conventional conforming loans with Private Mortgage Insurance (PMI) approval. PMI company guidelines are strict, so the larger the down payment the better. If there is mortgage insurance, it can have a payment factor as high as 0.96% of the loan amount. This would equate to a monthly amount of $160 on a $200,000 loan and $320 on a $400,000 loan. There is no more mortgage insurance if the down payment is at least 20%.
· High Balance Conforming loans – $417,001 to $697,500 in San Diego County. Typically, the minimum down payment is 15%, but buyers are encouraged to put at least 20% down.
· Jumbo > $697,500 in San Diego County. Some lenders require a minimum 25% down payment, however, Primary Residential Mortgage will accept a 20% down payment for loan amounts up to $2mil (sales price of $2.5mil).
As long as your buyer has a minimum credit score of 620, they are typically eligible for FHA/VA financing. However, Conventional financing is limited for those with lower credit scores. In fact, most lenders will not allow a down payment of less than 20% if the credit scores are less than 720.
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