FHA LOANS

Question 1

556. The Federal Housing Administration (FHA) is a

Answer 1

government agency within the Department of Housing and Urban Development (HUD).

Question 2

557. The FHA provides 100% insurance to

Answer 2

its approved lenders.

(The lenders recover any losses experienced during a foreclosure or short sale because the FHA makes up the difference to the lenders.)

Question 3

558. FHA loans have a required

Answer 3

Up Front Mortgage Insurance Premium (UFMIP) and a Monthly Insurance Premium (MIP) regardless of the down payment amount.

Question 4

559. The lenders set the interest rate, not FHA or HUD

Answer 4

559. The lenders set the interest rate, not FHA or HUD

Question 5

560. FHA loans are

Answer 5

assumable; there is no due-on-sale clause

Question 6

561. FHA loans have a

Answer 6

4% late fee of the P & I only.

Question 7

562. FHA borrowers must have a

Answer 7

valid Social Security number.

Question 8

563. FHA borrowers must be eligible to

Answer 8

work in the United States

Question 9

564. FHA loans have a minimum

Answer 9

down payment of 3.5% with a credit score of 580 or above. This can be a gift from a relative.

Question 10

565. On a FHA Loan, if credit score is between

Answer 10

500-579, the minimum down payment is 10%.

Question 11

566. FHA loans require

Answer 11

the use of an FHA-approved appraiser.

Question 12

567. An FHA Streamline Refinance doesn’t

Answer 12

require an appraisal, or income and credit verification

Question 13

568. In a FHA loan, Sellers may contribute up to\

Answer 13

6% of the lesser of the property’s sales price or the appraised value toward closing costs.

Question 14

569. In an FHA loan Initial premium—

Answer 14

upfront mortgage insurance premium (UFMIP)for a 15- and 30-year purchase and refinance transactions for cases assigned on orafter April 9, 2012 - 1.75% of the loan amount.

Question 15

570. Credit Score Requirement - borrowers with a minimum score of 580 or above are

Answer 15

eligible for maximum financing

Question 16

571. Credit Score Requirement - borrowers with a minimum score of 500 to 579 will be

Answer 16

eligible for a loan with up to 90% LTV

Question 17

572. Credit Score Requirement - borrowers with a minimum score under 500 are not

Answer 17

Are not eligible for FHA financing. The Upfront Mortgage Insurance Premium is charged on all FHA loans and paid to HUD after the loan closing.

Question 18

573. FHA requires

Answer 18

three (3) months ownership before resale

Question 19

574. FHA loans have a maximum loan amount in each county, which does not include

Answer 19

the Up-Front Mortgage Insurance Premium.

Question 20

575. Borrowers with FHA loans must:

Answer 20

Establish occupancy of the property as their principal residence within 60 days of signing a security instrument and live inthe house for at least one year

Question 21

576. FHA limits transactions as follows:•

Answer 21

Resales occurring 90 days or less following acquisition will not beeligible for an FHA mortgage.• Resales occurring 91 to 180 days following acquisition will be eligiblefor an FHA loan provided an additional independent appraisal isobtained• Resales occurring 90 days to one year following acquisition will besubject to additional review to establish value

Question 22

577. 203(b) Home Mortgages:

Answer 22

FHA’s primary program, 203(b) is a fixed-rate program used to purchase or refinance one-to-four-unit family dwellings.

Question 23

578. 234(c) Condominium Mortgages:

Answer 23

An FHA condo loan, also known as Section 234(c), is a mortgage insured by the FHA, which is designed to assist people who are getting a new condo

Question 24

579. 203(k) Rehab Mortgage:

Answer 24

Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.

Question 25

580. 251 Adjustable-Rate Mortgages:

Answer 25

The 251 program is based on 203(b), with the added feature of an adjustable rate. FHA offers several different types of ARMs, including one-, three-, five-, seven- and ten-year versions.

Question 26

581. Energy Efficient Mortgages:

Answer 26

These loans are allowed for improvements to existing and new construction properties to increase their energy efficiency. Financing is the greater of 5% of the loan or $4,000, with the maximum capped at $8,000.

Question 27

582. 245(a) Growing Equity Mortgages and 245 Graduated Payment Mortgages:\

Answer 27

Similar in structure, these programs are intended to assist borrowers by lowering the initial costs of their mortgage. Payments increase each year, so the programs are best for borrowers expecting a steady increase in their income over time.

Question 28

583. 2-1 Buy Downs:

Answer 28

FHA permits borrowers to buy down the rate on their fixed- rate loan. Lenders are required to qualify the borrower at the note rate and not the buydown rate. In this type of buy down, the borrower deposits funds in an escrow
account in order to offset lower interest.

Question 29

584. 203(g) Officer and Teacher Next Door: The 203(g) program is

Answer 29

intended to revitalize communities by offering homes for sale at a 50% discount off the HUD appraised value to teachers, law enforcement officers and firefighters/EMTs. HUD requires a mortgage agreement to be signed for the discounted amount although no payments or interest is charged as long as the borrower fulfills a three-year owner occupancy requirement