FHA Flashcards
Max LTV: FHA purchase @ > 580
96.5%
Max LTV: FHA rate & term refi
97.75%
Max LTV: FHA purchase @ < 580
90%
Max LTV: FHA cash out refi
85%
Min down: FHA purchase @ 570
10%
Min down: FHA purchase @ 600
3.5%
Minimum score for 3.5% down on FHA purchase?
580
Conditions for a HUD approved second home? (You can get a second FHA mortgage if these conditions are met)
- At least 100 miles away from first home
- Necessary for employment, and
- Insufficient rental property near place of employment
Or
• Rendered necessary by increase in # of dependents
FHA UFMIP:
1.75%
FHA MIP with LTV=96.5%
0.85%
FHA MIP with LTV = 94%
0.8%
Max Seller concession: FHA
6%
What is the late fee for an FHA or a VA loan?
4% of monthly P&I
Max ratios: FHA @ 560 credit score
31/43 - no DTI cap extensions w/ compensating factors allowed with credit score below 580
Max ratios: FHA @ 580 and above with no discretionary debt
40/40
Max ratios: FHA @ over 580 with no compensating factors
31/43
Max ratios: FHA @ above 580 with verified and documented cash reserves
37/47
Max ratios: FHA @ above 580 with documented and verified cash reserves AND residual income
40/50
Practical min credit score: FHA
500
A Lead-Based Paint disclosure is require for homes built before ____
1978
An appraisal is valid for __ days, with an optional __ days extension if the mortgagee approved the borrower while the appraisal was still valid.
120
30
When can a judgement be considered resolved?
When the borrower has entered into a valid agreement with the creditor to make regular payments on the debt, and has made timely payments for at least 3 months. The obligation must not supersede the FHA-insured lien. The mortgagee must include the payment in the DTI, and obtain a copy of the agreement and proof that payments were made on time.
A borrower with a chapter 7 bankruptcy can obtain an FHA-insured mortgage if _ years have elapsed since the date of bankruptcy discharge.
2 years, but 12 months is acceptable if the bankruptcy was caused by circumstances beyond the control of the borrower.
A borrower can obtain an FHA-insured mortgage if _ years have elapsed since his/her foreclosure or deed-in-lieu of foreclosure.
3 years after case number assignment
FHA: for a student loan in deferment, how do you calculate the payment to include in DTI calculations?
0.5% of the outstanding balance.
Balance x 0.005
FHA identity of interest transactions have an LTV limit of:
85%
A property is not eligible for an FHA-insured mortgage if it’s being resold fewer than __ days after acquisition.
90
A mortgagee must obtain a second appraisal by another appraiser if:
- The resale date of a property is between 91 and 180 days after acquisition, and
- The resale price is at least 100% greater than the price paid to acquire the property
The cost of this second appraisal cannot be paid by the borrower.
Restrictions on LTVs are based on the loan amount before or after addition of the UFMIP?
Before
FHA: max LTV on a non-occupying co-borrower transaction. When can this limit be exceeded?
75%
It can be exceeded to 96.5% if the borrowers are family members, provided the transaction does not involve:
* a family member selling to a family member who will be a non-occupying co-borrower, or * a transaction on a two to four-unit property
FHA: for accounts (excluding student loans and contingent liabilities) where no documented payment is available, how should the mortgagee calculate the monthly payment?
5% of the outstanding balance of the loan
FHA: when can the mortgagee include bonus income? How do you calculate it?
If they’ve received it for two years, and it’s likely to continue.
One year is sufficient if the mortgagee documents that it’s been earned consistently and is likely to continue.
Average the last two years, or 12 months, as applicable. If bonus income has decreased by more than 20% in the last year, you must use that year’s income.
FHA: for seasonal employees with unemployment income, the mortgagee must document:
That the unemployment income has been received for at least two full years and that it is likely to continue.
A cash-out refinance must be downgraded to a refer and manually underwritten if any mortgage trade line reflects ___
Any delinquency in the 12 months prior to case number assignment.
FHA: required documentation for self-employed borrower’s business debt
Documentation that the debt is paid out of company funds (bank statement? Letter from accountant?) and that the debt was considered in the business’ cash flow analysis (tax returns)
FHA: effective income must be reasonably likely to continue for ___ in order to be included in analysis
3 years
FHA Primary Employment:
How do you calculate income for salaried workers? Employees who are paid hourly and whose hours are consistent? Employees who are paid hourly and whose hours vary?
- Use their salary
- Use rate x hours
- Average income over previous 2 years, but if mortgagee can demonstrate an increase in wages, it can use the average of the most recent 12 months
A liability doesn’t need to be counted if there are fewer than __ payments left.
10 payments
How often do FHA loans accrue interest?
Monthly
An identity of interest transaction is a sale between _____.
Family members and parties with an existing business relationship.
The 85% Identity of Interest LTV limit may be exceeded under the following circumstances:
If the borrower purchases as his principal residence:
- The principal residence of another family member
- A property owned by a family member in which the borrower has been a tenant for at least six months immediately predating the sales contract. A lease or other written evidence of occupancy is required.
FHA: How do you calculate rental income?
75% of the lesser of:
- the fair market rent reported by the appraiser - the rent reflected in the lease or rental agreement
FHA: How do you adjust non-taxable income?
Add 15%
When does the MIP drop on a loan with LTV less than or equal to 90%? With LTV > 90%?
After 11 years
Never
FHA: if borrower has collections with a total balance of > $2000, can the loan proceed?
Yes, but 5% of the total balance must be included as a liability in DTI calculations. No documentation is required.
FHA: borrower must have received commission for _________ in order to include it in income.
One year consistently, likely to continue - document w/ VOE, paystubs; average over # of months received.
Can you do an FHA loan on a property with a cistern?
Yes, but it must be appropriate for the market, be more than a quarter of a mile away from any sources of contamination, and meet local or state health requirements. You may need a waiver from the nearest HUD Homeownership Center.
FHA: self-employment income can be considered effective income when:
The Mortgagee may consider Self-Employment Income if the Borrower has been
self-employed for at least two years.
If the Borrower has been self-employed between one and two years, the
Mortgagee may only consider the income as Effective Income if the Borrower
was previously employed in the same line of work in which the Borrower is self-
employed or in a related occupation for at least two years.
(2) Stability of Self-Employment Income
Income obtained from businesses with annual earnings that are stable or
increasing is acceptable. If the income from businesses shows a greater than 20
percent decline in Effective Income over the analysis period, the Mortgagee must
downgrade and manually underwrite.
FHA (manual): “acceptible credit history”
No lates on rent or installment debt in previous 12 months, and no more than two 30-day lates in the previous 24 months.
No more than one 90-day/three 60-day lates on revolving accounts in the last 12 months.
Mitigating circumstances can be taken into consideration if they can be documented.
FHA MIP cancellation rules:
The MIP is cancelled after 11 years on loans w/ a down payment > or = 10% , regardless of the term of the mortgage.
