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FHA Mortgage Loans Home > FHA Loans
FHA home loans are currently experiencing rapid growth in popularity. FHA financing is one of the most popular ways to become a homeowner or refinance an existing high loan-to-value mortgage. FHA provides safe mortgage insurance solutions to help low- and moderate-income families become homeowners by lowering some of the costs of their mortgage loans. FHA mortgage insurance also encourages mortgage companies to make loans to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements, by protecting the mortgage company against loan default on mortgages for properties that meet certain minimum requirements--including manufactured homes, single family and multifamily properties.
Innovative FHA solutions such as the streamline 203(k) "buy and repair" mortgage, 95% cash-out refinance, reverse mortgage (HECM) for seniors, and basic construction-permanent or manufactured homes insured financing options are available today to meet borrowers' needs for a better tomorrow. Creating a stable housing market, where homebuyers can make sound financial decisions to achieve the American dream, must be our top priority.
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POSITIVE VALUE PROPOSITION |
FHA LOAN TYPES |
| No minimum credit score. |
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| Non-traditional credit is acceptable. |
Streamline 203(k) "buy and repair" |
| Low 3% downpayment. |
95% cash-out refinance |
| Non-occupant, co-borrower is permitted. |
Reverse mortgage (HECM) for seniors |
| Expanded qualifying ratios. |
Basic construction-permanent |
| No prepayment penalties. |
Refi out of foreclosure |
| Fully assumable. |
Fixed 15 or 30 years. |
| Lower mortgage insurance premiums. |
Section 223(f) existing multifamily rental housing |
Key Updates:
• As of January 1, 2009, the new FHA minimum down payment will increase from 3% to 3.5%.
• Unless an agreement and new legislation pass congress, Down Payment Assistance programs are finished as of 10/1/2008.
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• "HOPE FOR HOMEOWNERS" PROGRAM IS LAUNCHED TO HELP STRUGGLING FAMILIES KEEP THEIR HOMES. |
The Economic and Housing Recovery Act of 2008 unveils additional mortgage assistance for homeowners at risk of foreclosure or in foreclosure. The FHA HOPE for Homeowners program will refinance mortgages for borrowers who are having difficulty paying their current mortgage(s), but can afford a new fixed rate loan insured by HUD's Federal Housing Administration (FHA).
"For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford," said HUD Secretary Steve Preston. "FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners' ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them."
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"If your home is worth substantially less than what you paid for it, or more importantly if you house is worth less than the total of all your mortgage(s) then this program may be your way out..." |
Borrower Eligibility
Borrowers are encouraged to contact their lender to determine eligibility, but may be eligible if, among other factors:
- Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments and did not intentionally miss mortgage payments.
- They cannot afford their current loan(s) and are not able to pay their existing mortgage(s) without help.
- The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes or investment property.
- As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
- They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).
For borrowers who refinance under HOPE for Homeowners, their current lenders will be required to "write down" the size of the mortgage to a maximum of 90 percent of the home's new appraised value. In many instances, lenders will determine that such a reduction in principal will allow them to avoid a costly foreclosure, while helping borrowers stay in their homes.
HOPE for Homeowners also includes the following provisions:
- The maximum loan amount may not exceed $550,440.
- The new mortgage can be no more than 90 percent of the new appraised value including any financed up-front Mortgage Insurance Premium.
- The up-front Mortgage Insurance Premium is 3 percent and the Annual Mortgage Insurance Premium is 1.5 percent.
- The holders of existing mortgage liens must waive all prepayment penalties and late payment fees (we have the forms for this).
- The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
- Existing subordinate lenders must release their outstanding mortgage liens.
- Standard FHA policy regarding closing costs applies, and can be one of the following:
- Financed into the new loan provided the value of the mortgage (including the up-front Mortgage Insurance Premium) does not exceed 90 percent of the new appraised value of the home.
- Paid from the borrowers' own assets.
- Paid by the servicing lender or third party (e.g., federal, state, or local program).
- Paid by the originating lender through premium pricing.
- The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
- The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.
The lender will disclose to the homeowner the benefits of the program including home retention, a new affordable mortgage based on the current appraised value, and the ability to have equity now and build more in the future. The lender will also explain the prohibition against new junior liens against the property unless directly related to property maintenance, and a minimum of 50 percent equity and appreciation sharing with the Federal government.
The costs to the homeowner include the up-front and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD's appreciation share.
If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share during the first year to a minimum of 50 percent after five years. The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.
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