Tuesday, July 23, 2013

HUD and FHA Financing

The Northwest Independent Real Estate Brokers Association (NWIBA) recently hosted a live webinar with Nancy West of the HUD Santa Ana Homeownership Center to discuss FHA changes such as appraisal protocol, the Housing & Economic Recovery Act of 2008, the status of housing inventory, and other topics of interest. Nancy West is one of four Marketing and Outreach Specialists for the US Department of Housing and Urban Development.

The FHA has a mission of promoting home ownership. She noted that FHA has banned all seller-assisted down payment programs, and in today’s strict lending environment, it is wise to talk to as many lenders as possible. Temporary limits on mortgage loan amounts are due to expire at the end of this year 2013. FHA will insure up to four units in a residence, and limits vary by county.

In King County, FHA will insure loans up to:
$567,500 on a single-family house
$726,500 on a duplex
$878,150 on a triplex, and
$1,091,350 on a four-plex.

All must be owner-occupied for at least one year, and 85% of the rents collected will help the owner qualify for a mortgage. FHA loans only require a 3.5% down payment, and 100% of that may be gifted by family or an acceptable secondary financing source. The state housing finance commission is a good source for eligible down payment assistance programs. No down payment assistance may be provided by the seller or the broker.

HUD will approve buyers with FICO credit scores as low as 500; and will also look at non-traditional credit worthiness for those who have not established traditional lines of credit.

FHA mortgages are fully assumable by income- and credit-qualifying buyers. Like most lenders today, full documentation is required for a buyer to get an FHA loan.

FHA loans can be used to purchase property that has been re-sold in the preceding 90 days, although justification is required where the sales price exceeds 20% of the acquisition cost.

Short sale sellers are not eligible for an FHA mortgage for three years. Approximately 30% of all mortgages today are FHA-insured.

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