How FHA Helps REALTORS® Sell More Homes

FHA’s Mission: Insure Mortgages

Help consumers purchase and improve homes

Give lenders confidence that loans will be repaid

Why Use FHA?

Good terms because lenders are protected from risk

Many products for buying, renovating, and refinancing

FHA-approved lenders everywhere

Who Benefits Most?

First-time home buyers and others who need cash down as low as 3.5 percent

Borrowers seeking low monthly payments

Those who need help qualifying because their credit is less than perfect

Not the Same Old FHA

Simpler process for lenders

More flexible rules for appraisals and closing costs

Loss mitigation to avoid foreclosure

The New FHA

TOTAL Scorecard credit score system: quick, fair

Loan-to-value ratio comparable with other prime products

Premiums: Up front cannot exceed 3.0 percent, 2.75 percent for first-time homebuyers who participate in counseling. Plus 0.5 percent annually

Appraisal Changes

FHA guidelines are the same as for conventional loans

No need to repair cosmetic defects or normal wear and tear

Focus on valuation of the property

No List of Allowable and Not Allowable Closing Costs

Borrowers permitted to pay virtually all closing costs

RESPA still applies

Qualifying Borrowers without Traditional Credit Histories

Many lack traditional credit scores

FHA permits lenders to accept non traditional histories, such as a report from Payment Reporting Builds Credit®

What This Means for You and Your Clients

Better pricing

Easier access to credit

Lower down payments

HUD relaxes flipping rule

Home Purchase

One- to four-family homes (Section 203b)

Condominium units

Manufactured (mobile) homes, including lots

Homes needing rehabilitation

One- to Four-Family Homes (Section 203b)

New or existing homes

Loan limits vary based on geographic area

96.5 percent financing possible

Finance upfront insurance premium within the mortgage

Adjustable Rate Mortgages for Purchase or Refinance

Keep initial rates and mortgage payments low

Easier to sell affordable homes even when mortgage rates are high

Maximum change over loan lifetime: 5 percentage points

Condominium Units

Low and moderate income renters stay after conversion

Condo must serve as buyer’s principal residence

Loan insured up to 30 years

Manufactured (Mobile) Homes

New or used

5 percent down payment

Lender insured to 90 percent of home value, maximum $48,600

Manufactured Home Lot and Combination Insurance

Lender insured to 90 percent of loan value

Up to $64,800 for manufactured home and lot and $16,200 for lot

Homes Needing Rehabilitation

Buy or rehabilitate homes

Property valuation: Pre-rehabilitation plus rehab cost or 100 percent of appraised value after rehabilitation

Low insurance premium

Rehabilitation Mortgage Insurance — 203(k) Program

A single mortgage buys a home requiring $5,000+ for rehabilitation

Or rehabilitate an existing home

Borrowers save time and money with a loan insured even before the property is offered as security

Streamlined 203(k) Limited Repair Program

For single-family properties sold by HUD or to refinance an existing mortgage

Make improvements up to $35,000 and get a mortgage based on after-rehab value

Energy Efficient Mortgages (EEM) Program

New homebuyers or homeowners can finance energy-efficient features

No separate loan required

Up to 5 percent of property value

Property Improvement Loan Insurance

Light or moderate rehabilitation of property or construction of nonresidential buildings

Insured up to 90 percent

Up to $25,000 for a single-family home or up to $60,000 for multi-family property

Housing Programsfor Special Groups

Essential public employees

Indian reservations and other restricted lands

Reverse mortgages for homeowners age 62 or older

Designated disaster areas

“Good Neighbor Next Door” Program

Essential public servants can get up to 50 percent discount off list price

Commit to 36 months as sole residence

Indian Reservations and Other Restricted Lands

Tribe must participate

FHA follows tribal policies for land lease

Borrowers must be able to meet FHA credit qualifications

Homeowners 62 or Older

Reverse mortgage/Home Equity Conversion Mortgage

Withdraw home equity as cash payments

Use cash for any purpose

Single Family Mortgage Insurance for Disaster Victims

100 percent financing

Current mortgage limits range from $172,632 to over $300,000

Education and Counseling

HUD offers Housing Counseling Assistance Program

Any renter, owner, or potential homeowner can learn how to make rent or mortgage payments

FHA Refinance Program

Raises loan to value (LTV) for “cash out refinances”

95 percent (85 percent for properties above $417,000)

One year’s worth of timely mortgage payments required

Protection Against Foreclosure

Loss Mitigation program authorizes lenders to assist borrowers in default

“Special Forbearance” offers temporary reduction or suspension of payments

Choose the Right FHA-Approved Lender

Refer clients only to lenders in whom you feel confident

They must understand FHA rules

Rules change, and your client doesn’t want surprises