Mortgage Loan Programs

The Federal Housing Administration () is a federal agency within the U.S. Department of Housing and Urban Development (HUD). 's primary objective is to assist in providing housing opportunities for low to moderate income families. has both single family (1-4 unit homes) and multi-family (5 or more units) mortgage lending programs. The agency does not generally provide the funds for the mortgages, but rather insures home mortgage loans made by private industry s such as mortgage bankers, savings and loans and banks.

Single Family Mortgages

What is the purpose of this program?
To provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. 

What are the eligibility requirements?
The borrower must meet standard credit qualifications. 
The borrower is eligible for approximately 97% financing. The borrower is able to finance closing costs and the up front mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium. 
Eligible properties are one-to-four unit structures. 

Adjustable Rate Mortgages

What is the purpose of this program?
Provides mortgage insurance for a person to purchase or refinance a principal residence at a lower initial interest rate. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. 

What are the eligibility requirements? 
Borrower must meet standard credit qualifications. 
Borrower is eligible for approximately 97% financing. Borrower is able to finance closing costs and the uppermost mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium. 

ARMS can only be used in conjunction with Sections 203(b), 234(c), and 203(k). 
The index used to determine the interest rate is the U.S. Treasury Security adjusted to a constant maturity of one year. 

Eligible properties are one-to-four unit structures. 

Energy Efficient Loans

What is the purpose of this program?
Provides mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy efficient improvements into the mortgage. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. 

What are the eligibility requirements? 
Borrower is eligible for approximately 97% financing. Borrower is able to finance closing costs and the up front mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium. 
Eligible properties are one-to-two unit existing and new construction. 
The cost of the energy efficient improvements that may be eligible for financing into the mortgage is the greater of 5% percent of the property's value (not to exceed $8,000) or $4,000. 

To be eligible for inclusion in the mortgage, the energy efficient improvements must be cost effective, meaning that the total cost of the improvements is less than the total present value of the energy saved over the useful life of the energy improvement. 
The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or energy consultant. Up to $200 of the cost of the energy inspection report may be included in the mortgage. 

203k Rehab Program

What is the purpose of this program?
Provides mortgage insurance for a person to purchase or refinance a principal residence or investment property and to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling. 

What are the eligibility requirements? 
Borrower must meet standard credit qualifications. 

Borrower may be an owner-occupant or an investor. 

Mortgage insurance premium is paid monthly. There is no up front mortgage insurance premium. 

Borrower can purchase a one-to-four unit property that was completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. 

Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided the existing foundation system is not affected and will still be used. The complete foundation system must remain in place. 

Construction Perm Loans

What is the purpose of this program?
Assist builders in obtaining construction financing by allowing borrowers to be approved prior to start of construction. 

Mortgage Amount 

Determined the same as any other loan with mortgage based on the lesser of sales price or appraised value. Appraisal would be done from plans and specifications with a requirement for completion inspection. Builder must supply a HOW warranty policy in order for the borrower to obtain a loan to value in excess of 90%. 

Closing

The loan would close in the name of the borrower prior to start of construction. Disbursement of Funds - Responsibility of the . Interest, commitment fees, inspection fees, hazard insurance, and other financing charges incurred during the construction period shall be the responsibility of the builder. 

Amortization 

Begin no later than the first day of the month following 60 days from the date of final inspection or certificate of occupancy. 

Payment of Mortgage Insurance 

Within 15 days of the date of closing. 

Endorsement 

Request for endorsement submitted by within 60 days from the date of final inspection or certificate of occupancy. 

Documents 

Loan closed using standard documentation with the addition of a Construction Rider to the Note and a Construction Loan Agreement. The construction documents must contain a provision that the construction terms cease to be effective and the terms become effective at the time of final inspection or certificate of occupancy. 

Escrows for Taxes and Insurance 

Established at the time of loan closing or at the time of final inspection or certificate of occupancy ( option). 

Builders 

approved builders only. 

Mortgage Insurance

requires a mortgage insurance premium on the 203(b) program. An up-front premium of 2.25% of the loan amount is paid at closing and can be financed into the mortgage amount. In addition, there is a monthly MIP amount included in the PITI of .50%. Condos do not require up front MIP - only monthly MIP. 

Down Payment Gifts

The down payment can be 100% gift funds. This is one of the key benefits to the program. 

Verification of the source of gift money is not required. However, it is necessary that the gift funds be deposited in the borrower's bank or savings account, or in an escrow account, prior to underwriting approval. Proof of deposit is required. 

Gift donors are restricted primarily to a relative of the borrower. They can also be certain organizations, such as a labor union or charitable organization. Contact your local branch for complete information. 

Bankruptcy and

Generally, a bankruptcy will not necessarily disqualify a potential borrower. Guidelines are as follows: 

Chapter 7: Two years must have passed since the bankruptcy was discharged; the borrow must have reestablished good credit without delinquencies for two years (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs. 

Chapter 13: A borrower currently paying off debts through this process may qualify if a minimum of one year of the payout period has elapsed and payment performance has been satisfactory with no new derogatory credit and the borrower must receive court approval to enter into the mortgage transaction.