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Product Description:
FHA Section 203(b)
Fixed-Rate 1-4 family: 296 (temporary buydown). Fixed rate fully-amortizing mortgage.

Const-To-Perm 1-Time Close:
Ineligible

Floatdown:
Unavailable

Extended Lock:
Available

Loan Amounts:
Standard HUD/FHA Mortgage Limits

Eligible Occupancy:
Primary Residences:
Eligible

Investors:
Allowed only on streamline refinances

Second/Vacation Homes:
Not permitted

Eligible Borrowers:
U.S. Citizens:
Eligible

Resident Aliens:
Eligible

Non-Perm Resident Aliens:
Eligible

Non-Resident Aliens:
Eligible

Eligible Properties:
1 Unit Detached:
Permitted

2-4 Unit Detached:
Permitted

Townhomes:
Permitted

Manufactured Housing:
Permitted

Attached PUDs:
Permitted; must be approved by HUD*

Condominiums:
Permitted; must be approved by HUD*

Cooperatives:
Not permitted

*If no appraisal; project approval is not required.

Qualifying Ratios:
29/41

Qualifying Rate:
Based on the initial note rate or first year buydown rate if a buydown is present.

Temporary Buydown:
2% below note rate (2-1) or 1% below note rate (1-0)

Underwriting Guidelines:
FHA HUD Handbook 4155.1

Credit Score Minimum:
Not applicable for FHA/VA programs

Maximum Contributions:
Total of 6% of purchase price

Credit Documents:
Standard:
FHA Standard

Alternate:
Permitted, FHA Alternative

Reduced Doc:
Not permitted

Mortgage Insurance:
UFMIP (Up Front Mortgage Insurance Premium): except for condos; may be financed in all cases.

Risk Based Annual:
1.50 bps annually based on UPB; 1/12 escrowed monthly term

Condos:
Life of loan regardless of LTV, detached properties see LTV chart below.

Escrow / Impounds:
Full escrow required, regardless of LTV; no waivers permitted.

Prepayment Penalties:
None

Assumability:
Standard FHA assumability

Special Fees:
None

Geographic Restrictions:
None

Acceptable Appraisers:
FHA approved appraisers, as assigned by FHA.

Acquisition Cost:
Lesser of the purchase price or appraised value plus the allowable closing costs.

Allowable Closing Costs:
As determined by HUD; include the appraisal fee and any inspection fees, actual cost of credit reports, the lenders origination fee, deposit verification fees, home inspection service fees (up to $200), cost of title examination, title binder and lender's title insurance, document preparation (if performed by a third party not controlled by the lender), property survey, termite (if common and customary), attorney's fees, recording fees and taxes, and certification fees (such as water tests, etc.) and flood certification. HUD's definition of closing costs does not include discount points.

Product Specific Documentation Requirements:
(Note: This Product Specific Documents Requirements section is provided for quick reference of the documents that are required, over and above the documentation required for compliance purposes, for this product only.)

IRS Form 4506 for loan applications requiring tax returns or using alternative documentation
FHA Borrowers Contract with respect to hotel and transient use
Addendum to application
Important Notice To Homebuyers
51% Owner Occupancy Certifications for condos
FHA/VA Addendum
Seller Disclosure
FHA Identity of Interest Certification
Builders Certification
FHA Potential Home Energy Benefits
Mortgage Credit Analysis Worksheet
For Your Protection: Get A Home Inspection
Direct Endorsement Commitment
FHA Assumption Notification
Warranty of Completion
FHA First Time Homebuyer Counseling Disclosure

Calculating Maximum Mortgage Amount

Value/Sales Price No Cash-Out

(not streamline)

(subject to State and County HUD published maximum mortgage limits) Cash-Out Maximum LTV

Low Closing Cost State
High Closing Cost State

$50K or less
85%
98.75% of the lesser of the Sales Price or the Appraised Value
98.75% of the lesser of the Sales price or the Appraised Value

$50K - $124K
lesser of 97.75% x the appraised value
-or-
(appraised value + allowable closing costs) x 90% + $6,750 1
85%
97.65% of the lesser of the Sales Price or the Appraised Value
97.75% of the lesser of the Sales price or the Appraised Value

greater than $125K
lesser of 97.75% x the appraised value
-or-
(appraised value + allowable closing costs) x 90% + $6,750 1
85%
97.15% of the lesser of the Sales Price or the Appraised Value
97.75% of the lesser of the Sales price or the Appraised Value

1 Complete the following calculations:

a) Add the existing principal and indebtedness (but no interest), plus

b) Any subordinate liens seasoned at least one year, plus

c) All closing costs associated with the transaction (but not prepaid items), plus

d) Reasonable discount points, plus

e) Cost of repairs and improvements required by the appraiser, and

f) Subtract any refund of MIP if originally financed in the mortgage.

2 Does not apply to properties under construction or less than one year old without prior FHA approval, and these remain limited to 90% financing.

3 Minimum cash investment of 3% of the estimate of the cost of acquisition, excluding closing costs although closing costs may be in included in satisfying the 3% requirement. The 3% investment cannot include discount points or prepaids.

4 Does not apply to transactions not typically eligible for the previous 97/95/90 percent financing such as identity of interest transactions, purchases with non-related, non occupying borrowers, etc.

FHA Underwriting Features

Co-Signers:
When there are two or more borrowers, but one or more will not occupy the property as a principal residence, the maximum mortgage is usually limited to 75% LTV. Co-signers do not take title to the property but obligate themselves on the mortgage note. The co-signers income, assets, liabilities, and credit history are included in determination of creditworthiness.

Neither a co-signer nor a co-borrower may be a party that has an interest in the transaction, such as the seller, builder, real estate agent, etc.

Unless otherwise exempted, any non-occupying co-signer or co-borrowers must have a principal residence in the United States.

Co-Signed Debt Qualifying:
Considered a contingent liability unless statements from creditor and maker show that the borrower has not made the payments for the last 12 months, usually by means by canceled checks indicating payments made by other party.

Liabilities:
Considered in debt to income ratios if there are ten (10) or more payments remaining. Debts with less than 10 months may be considered if the amount of the debt affects the borrower's ability to make the mortgage payment during the months immediately after closing.


	Federal Housing Authority (FHA)

	Fannie Mae (FNMA)

	Freddie Mac (FHLMC)

	Alternative and Non-Conforming

	Title in Process Program (TIPP)


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