FHA Loans

Question 1

The Federal Housing Administration (FHA) is a government agency within the ______________________________.

Answer 1

Department of Housing and Urban Development (HUD).

Question 2

The FHA provides _____% insurance to 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.

Answer 2

100%

Question 3

FHA loans have a required _______________ and a _________________ regardless of the down payment amount.

Answer 3

Up Front Mortgage Insurance Premium (UFMIP) ; Monthly Insurance Premium (MIP)

Question 4

Who sets the interest rate?

Answer 4

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

Question 5

Are FHA loans assumable or unassumable?

Answer 5

FHA loans are assumable; there is no due-on-sale clause.

Question 6

What is the late fee for an FHA loan?

Answer 6

4% of P & I Only

Question 7

What must the FHA borrow have?

Answer 7

Valid Social Security number and must be eligible to work in the United States.

Question 8

What is the minimum down payment with a credit score of 580 or above?

Answer 8

3.5% down payment

Question 9

If the credit score is between 500-579, the minimum down payment is what?

Answer 9

10%

Question 10

What kind of appraiser does the FHA require?

Answer 10

FHA loans require the use of an FHA-approved appraiser.

Question 11

What doesn’t an FHA Streamline Refinance require?

Answer 11

An FHA Streamline Refinance doesn’t require an appraisal, or income and credit verification.

Question 12

What can the seller contribute with an FHA loan?

Answer 12

In a FHA loan, Sellers may contribute up to 6% of the lesser of the property’s sales price or the appraised value toward closing costs.

Question 13

What is the FHA Loan Initial Premium amount?

Answer 13

In an FHA loan Initial premium—upfront mortgage insurance premium (UFMIP) for a 15- and 30-year purchase and refinance transactions for cases assigned on or after April 9, 2012 - 1.75% of the loan amount.

Question 14

Credit Score Requirement - borrowers with a minimum score of ________ are eligible for maximum financing

Answer 14

580 or above

Question 15

Credit Score Requirement - borrowers with a minimum score of _________ will be eligible for a loan with up to 90% LTV

Answer 15

500 to 579

Question 16

Credit Score Requirement - borrowers with a minimum score ________ are not eligible for FHA financing.

Answer 16

under 500

Question 17

The Upfront Mortgage Insurance Premium is charged on all FHA loans and paid to ____ after the _________.

Answer 17

HUD ; loan closing

Question 18

FHA requires ______ ownership before resale.

Answer 18

three (3) months

Question 19

FHA loans have a maximum loan amount in each ______, which does not include the __________________.

Answer 19

county; Up-Front Mortgage Insurance Premium.

Question 20

Borrowers with FHA loans must: Establish occupancy of the property as their principal residence within ___ days of signing a security instrument and live in the house for at least _______.

Answer 20

60; one year.

Question 21

FHA limits transactions as follows:

Answer 21

• Resales occurring 90 days or less following acquisition will not be eligible for an FHA mortgage.
• Resales occurring 91 to 180 days following acquisition will be eligible for an FHA loan provided an additional independent appraisal is
  obtained.
• Resales occurring 90 days to one year following acquisition will be subject to additional review to establish value.

Question 22

What is a 203(b) Home Mortgage?

Answer 22

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

Question 23

What is a 234(c) Condominium Mortgages?

Answer 23

234(c) Condominium Mortgages: 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 into a new condo.

Question 24

What is a 203(k) Rehab Mortgage?

Answer 24

203(k) Rehab Mortgage: 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

What is a 251 Adjustable-Rate Mortgages?

Answer 25

251 Adjustable-Rate Mortgages: 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

What is an Energy Efficient Mortgages?

Answer 26

Energy Efficient Mortgages: 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

What is a 245(a) Growing Equity Mortgages and 245 Graduated Payment Mortgages?

Answer 27

245(a) Growing Equity Mortgages and 245 Graduated Payment Mortgages: 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

What is a 2-1 Buy Down?

Answer 28

2-1 Buy Downs: 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 buy down rate. In this type of buy down, the borrower deposits funds in an escrow account in order to offset lower interest.

Question 29

What is a 203(g) Officer and Teacher Next Door?

Answer 29

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