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FHA offers fantastic loan programs with low down payment requirements. This slide show accompanies our Home Buyer Education Classes that are held online at no charge. For more information about attending one of these free classes call 1-866-667-6724
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A Complete Guide to FHA Purchase Loan Options
Thank You for Attending
We Will Begin in a MomentClass will begin at 7:00pm
Presented By:Broadview Mortgage Corporation
Presenter:Scott Schang
Contact Information:
Phone: [email protected]
A Complete Guide to FHA Purchase Loan Options
The Purpose and Goals of this Class
• To Create and Empower Home Owners
• Educate you about the FHA purchase options available to you in today’s market
• Empower you with the ability to make educated decisions about your home financing options
• Encourage you to ask questions and get informed about the home buying process
A Complete Guide to FHA Purchase Loan Options
Topics We Will Cover In This Class
• What’s new in 2009 with FHA financing
• A Complete Guide to FHA purchase loans
• Qualifying for the $7,500 Federal Tax Credit
• Wrap Up and Take Aways
A Complete Guide to FHA Purchase Loan Options
Ask Questions throughout presentation
– You may type questions in at any time during the presentation – Questions box on your screen
– FHA loan specialists are standing by to answer your questions during the presentation
– The only dumb question is the one you don’t ask
Write number down now in case you get disconnected
1-866-667-6724
A Complete Guide to FHA Purchase Loan Options
What’s New in 2009
• 2009 FHA Loan Limits– Based on MSA – from up to $625,500– “FHA Jumbo” is anything above $417,000
• Results in slightly higher interest rates
• Down Payment Requirement– Increased from 3% to 3.5%
• Private Mortgage Insurance - PMI– Upfront PMI increased from 1.5% to 1.75%– Monthly PMI increased from .50% to .55%
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Credit Score Requirements– 580 Minimum Credit Score as a guideline– Can go lower on exception basis– 620 Minimum Credit Score – “FHA Jumbo”
• Loan amount over $417,000
• Non traditional credit lines temporarily suspended as of 4th quarter 2008– Lack of credit score or depth of credit
supplemented by alternative sources• Phone bills, utility bills, auto insurance…etc.
• Investors not accepting – Market Conditions
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Employment Requirements– Must have 2 year history of employment
• If in school or military provide transcripts or discharge papers
– Self Employed must have minimum 2 year history• Business license and tax returns
– Gaps in employment must be explained• Must be at new job for at least 6 months
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Income Qualifying Guidelines– Automated underwriting approve/eligible
• Debt to income ratios approved
– FHA Total Scorecard – Manual Underwriting• Much more restrictive debt to income ratios
– Non Occupying Co-Mortgagors • Can use income of Co-Signer to help qualify
– All FHA Loans require full income documentation• Tax returns, W2’s, Pay Stubs
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility
• Income Qualifying Guidelines– Converting Existing Homes into Rentals
• Bad Apples - Effective September 19th, 2008• Temporary exclusion of rental income from
vacated property– Must qualify for full PITI payments on both
homes.• Exception – Relocation with new employer or
transferred by the current employer– Must have executed 1 year lease – Copy of deposit check
• 75% Equity – Appraisal or balance vs. price
A Complete Guide to FHA Purchase Loan Options
Borrower Eligibility Highlights
• Do not have to be first time home buyer
• No income limitations
• Flexible qualifying criteria
• Can own other properties
• Can use non occupying co-mortgagers to qualify
A Complete Guide to FHA Purchase Loan Options
Property Eligibility
• 1-4 Units ok – Owner occupied only
• Loan limits increased for 2,3,4 units– Limits determined by MSA – See site for link
• No asset requirements for 1-2 unit homes– 3 months PITI required for 3-4 units
• Can buy any eligible property including short sales and foreclosures– Typically must be owned minimum of 90 days– Foreclosures are the exception
A Complete Guide to FHA Purchase Loan Options
Property Eligibility
• Appraisal requirements are much more strict than conventional lender guidelines– Inspection is significantly more thorough– Property must be in “livable condition”
• Toilets work• Sinks work• Heating, electrical• Light switches, outlets
• Be cognizant of damage – especially to bank owned foreclosures
A Complete Guide to FHA Purchase Loan Options
Down Payment and Closing Costs
• 3.5% Down payment required– 100% of down payment may be a gift
• Gift funds can be from relative, employer, government grant– No expectations of repayment– No liens against property
• Can use community seconds– City, State, Federal down payment assistance
programs ok– Will allow up to 100% of purchase price with
approved secondary financing
A Complete Guide to FHA Purchase Loan Options
Down Payment and Closing Costs
• May receive up to 6% of purchase price from seller– Can be used to cover closing costs– Can be used to “buy down” interest rate– Can not be used for down payment
• Buying down the interest rate– Ability to pay upfront fees to permanently reduce
interest rate– Significant long term savings
• May have challenges asking for max in competitive offer environments
A Complete Guide to FHA Purchase Loan Options
Mortgage Insurance
• FHA Loans require 2 types of Mortgage Insurance Premiums - MIP
– Upfront Mortgage Insurance Premium• 1.75% of Loan Amount• Can be financed into loan amount
– Monthly Mortgage Insurance Premium• .55% of Loan Amount• Included in monthly payment• Included on mortgage statement
A Complete Guide to FHA Purchase Loan Options
Mortgage Insurance
• Calculating your UFMIP Payment - Example– $200,000 Purchase Price x 96.5%
• $193,000 base loan amount– $193,000 x 1.75% = $3,377.50 add to base
• $196,377.50 is financed loan amount
• Calculating your MIP Payment - Example– $200,000 Loan amount x .55% = $1,100
Divided by 12 = $91.67 MIP
A Complete Guide to FHA Purchase Loan Options
Only use an FHA Approved lender!
• Many illegal “Branch” companies that are not approved to originate FHA loans
• Check official HUD website for approval status of lender - will provide link on site
• “Red Flags” include – a different company name and/or address on page 3 of loan application.
$7,500 Federal Tax Credit
• No-interest loan paid back over 15 years
• Must purchase on or before July 1st, 2009– Between April 8th, 2008 and July 1st , 2009
• Must be first time home buyer– Can not have owned in past 3 years
• 10% of purchase price up $7,500
• $7,500 - Married filing joint or Single taxpayer
• Married filing separate $3,750
$7,500 Federal Tax Credit
• Home bought in 2008 can be claimed on 2008 returns
• Home bought in 2009 can be claimed on 2008 (or amended 2008) return
• Income limit is $150,000 for married couple– Phase out maximum is $170,000
• Income limit is $75,000 for single taxpayer– Phase out maximum is $95,000
• Loan is paid back in 15 equal installments– First payment paid in the 2010 tax year
$7,500 Federal Tax Credit
• You would be ineligible for Tax Credit if:– Your income exceed the phase-out range– You buy your home from a close relative. This
includes your spouse, parent, grandparent, child or grandchild
– You stop using your home as your main home– You sell your home before the end of the year– You are a nonresident alien– Your home financing comes from tax-exempt
mortgage revenue bonds - CalHFA– You owned another main at any time during the
three years prior to the date of purchase
A Complete Guide to FHA Purchase Loan Options
Wrap up and Take Aways
– We are a direct Lender that specializes in FHA Refinance, Streamline and Purchase loans.
– We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, VA, Conventional and Jumbo Loans
– We are more than happy to be your “second opinion” if you are already working with someone
– We are committed to educating and empowering homeowners - Join us for future classes
A Complete Guide to FHA Purchase Loan Options
Wrap up and Take Aways
– You will receive a “Thank you” email with links to the information we’ve talked about here today
• Copy of power point presentation• Link to search HUD approved lenders• Link to search MSA Loan Limits• Dream Home Finder request• Secure on-line FHA loan application• Links to tools and resources we talk about in
all of our classes• A schedule of all upcoming classes
Upcoming Home Buyer Classes
• A Complete Guide to Buying Foreclosures and Short Sales
• A Complete Guide to Closing Costs and the Good Faith Estimate
• A Complete Guide to the CalSTRS 80/17 Home Purchase Program
• A First Time Home buyer’s Complete Guide to Credit and Qualifying
• A Complete Guide to the CalPERS Home Loan Program – No down option
Check back often for upcoming classes
Thank you for Attending
You input is ValuablePlease complete 2 question
survey when you log off
Presented By:Broadview Mortgage Corp.
Presenter:
Scott Schang
Contact Information:
Phone: [email protected]