a complete guide to fha purchase loans

Download A Complete Guide To FHA Purchase Loans

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Copy of presentation updated and uploaded March 26, 2009

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  • 1.A Complete Guide to FHA Purchase Loan Options
    • Sponsored by
  • Broadview Mortgage Corporation
  • 1-866-667-6724

2. FHA Purchase Loan Options

  • The Purpose and Goals of this Class
  • To Create and Empower Home Owners
  • Educate you about the FHA loan options available to purchase a home with minimum down payment
  • Empower you with the ability to make educated decisions about your home financing options
  • Encourage you to ask questions and get informed about the home buying process

3. FHA Purchase Loan Options

  • Topics We Will Cover In This Class
  • Whats new in 2009 with FHA financing
  • A Complete Guide to FHA purchase loans
  • Red Flags What to watch out for
  • Wrap Up and Take Aways

4. FHA Purchase Loan Options

  • Ask Questions throughout presentation
  • You may type questions in at any time during the presentation Questions box on your screen
  • FHA loan specialists are standing by to answer your questions during the presentation
  • This is aninteractivelearning environment.You will get the most value by having your specific questions answered
  • The only dumb question is the one you dont ask
  • Write number down now in case you get disconnected
    • 1-866-667-6724

5. FHA Purchase Loan Options

  • Whats New in 2009
  • 2009 FHA Loan Limits
    • Based on MSA up to $729,750
    • FHA Jumbo is anything above $417,000
      • Results in slightly higher interest rates
  • Down Payment Requirement
    • Increased from 3% to 3.5%
  • Private Mortgage Insurance - PMI
    • Upfront PMI increased from 1.5% to 1.75%
    • Monthly PMI increased from .50% to .55%

6. FHA Purchase Loan Options

  • Borrower Eligibility
  • Credit Score Requirements
    • 620 Minimum Credit Score as of
    • 660 Minimum Credit Score FHA Jumbo
      • Loan amount over $417,000
  • Non traditional credit lines temporarily suspended as of 4 thquarter 2008
    • Lack of credit score or depth of credit supplemented by alternative sources
      • Phone bills, utility bills, auto insuranceetc.
  • Investors not accepting Market Conditions

7. FHA Purchase Loan Options

  • Borrower Eligibility
  • Employment Requirements
    • Must have 2 year history of employment
      • If in school or military provide transcripts or discharge papers
    • Self Employed must have minimum 2 year history
      • Business license and tax returns
    • Gaps in employment must be explained
      • Must be at new job for at least 6 months

8. FHA Purchase Loan Options

  • Borrower Eligibility
  • Income Qualifying Guidelines
    • TOTAL Scorecard automated approve/eligible
      • Debt to income ratios approved
    • FHA Manual Underwriting
      • Much more restrictive debt to income ratios
    • Non Occupying Co-Mortgagors
      • Can use income of Co-Signer to help qualify
      • Income / Assets added to borrowers
    • All FHA Loans require full income documentation
      • Tax returns, W2s, Pay Stubs

9. FHA Purchase Loan Options

  • Borrower Eligibility
  • Income Qualifying Guidelines
    • Converting Existing Homes into Rentals
      • Bad Apples - Effective September 19 th , 2008
      • Temporary exclusion of rental income from vacated property
        • Must qualify for full PITI payments on both homes
      • Must have 6 months reserves Exceptions
      • Exception Relocation with new employer or transferred by the current employer
        • Must have executed 1 year lease
        • Copy of deposit check
      • 75% LTV Min. 25% Equity

10. FHA Purchase Loan Options

  • Borrower Eligibility Highlights
  • Do not have to be first time home buyer
  • No income limitations
  • Flexible qualifying criteria
  • Can own other properties
  • Can use non occupying co-mortgagers to qualify

11. FHA Purchase Loan Options

  • Property Eligibility
  • 1-4 Units ok Owner occupied only
  • Loan limits increased for 2,3,4 units
    • Limits determined by MSA See site for link
  • No asset requirements for 1-2 unit homes
    • 3 months PITI required for 3-4 units
  • Can buy any eligible property includingshort sales and foreclosures
    • Typically must be owned minimum of 90 days
    • Foreclosures are the exception

12. FHA Purchase Loan Options

  • Property Eligibility
  • Appraisal requirements are much more strict than conventional lender guidelines
    • Inspection is significantly more thorough
    • Property must be in livable condition
      • Toilets work
      • Sinks work
      • Heating, electrical
      • Light switches, outlets
  • Be cognizant of damage especially to bank owned foreclosures

13. FHA Purchase Loan Options

  • Down Payment and Closing Costs
  • 3.5% Down payment required
    • 100% of down payment may be a gift
  • Gift funds can be from relative, employer, government grant
    • No expectations of repayment
    • No liens against property
  • Can use community seconds
    • City, State, Federal down payment assistance programs ok
    • Will allow up to 100% of purchase price with approved secondary financing

14. FHA Purchase Loan Options

  • Down Payment and Closing Costs
  • Seller Paid DPA Discontinued Oct. 1 st , 2008
    • Nehemiah
    • AmeriDream
    • HART
  • Scramble to avoid discontinuation failed
  • H.R. 600 introduced earlier this month
    • Reinstate seller paid DPA
  • Earlier discussions of reinstatement
    • Higher mortgage insurance premiums

15. FHA Purchase Loan Options

  • Down Payment and Closing Costs
  • May receive up to 6% of purchase price from seller
    • Can be used to cover closing costs
    • Can be used to buy down interest rate
    • Can not be used for down payment
  • Buying down the interest rate
    • Ability to pay upfront fees to permanently reduce interest rate
    • Significant long term savings
  • May have challenges asking for max in competitive offer environments

16. FHA Purchase Loan Options

  • Mortgage Insurance
  • FHA Loans require 2 types of Mortgage Insurance Premiums - MIP
    • Upfront Mortgage Insurance Premium
      • 1.75% of Loan Amount
      • Can be financed into loan amount
    • Monthly Mortgage Insurance Premium
      • .55% of Loan Amount
      • Included in monthly payment
      • Included on mortgage statement