FHA Program

FHA Eligible Borrowers,Property Types, Rule and Docs

admin — Tue, 01 Apr 2008 02:07:00 GMT

[Enter Post Title Here]

Eligible BorrowersAs a general rule, FHA mortgages are provided to individuals only, although they are available to government agencies and approved non-profitorganizations as well. (see 4155 sec 2-2)All Borrowers MUST provide picture identification and have a Social Security number (or equivalent), and be checked against the OFAC list as required by the PATRIOT ACT. Listed individuals will not be eligible for financing.Borrower's Age:• There is no maximum age limit for an FHA borrower• The minimum age is the age at which the mortgage note can be legally enforcedin the state or other jurisdiction where the property is located.Citizenship and Immigration Status:Citizenship of the United States is not required for eligibility. FHA will insure mortgagesmade to lawful permanent resident aliens under the same terms and conditions as U.S.citizens. The subject property must either be the occupying borrower's principalresidence or, if an eligible secondary residence or investment property, the borrower's principal residence must be located in the United States. The borrower must also havea social security number (or equivalent Employment Authorization Documentation orEAD)Co-Borrowers and Co-SignersCo-borrowers may take title to the property and obligate themselves on the mortgagenote. FHA also permits a cosigner with no ownership interest in the property (does nottake title) to execute the loan application and mortgage note and, thus, become liablefor repayment of the obligation. The cosigner's income, assets, liabilities and credithistories are included in the determination of creditworthiness. FHA does not permit anindividual to take an ownership interest in the property at settlement withoutsigning the mortgage note.• Neither a co-borrower nor a cosigner may be a party that has an interest in thetransaction, such as the seller, builder, real estate agent, etc. Exceptions may begranted if the seller and co borrower/cosigner is a family member of the occupant owner.• The occupying borrower must sign the security instrument and mortgage note, and unless otherwise exempted (e.g., military service with overseas assignments, etc.), any non-occupying co-borrowers or cosigners must have a principal residence in the UnitedStates.Non-purchasing spouses: If required by state law in order to perfect a valid andenforceable first lien, the non-purchasing spouse may be required to either sign the security instrument or documentation evidencing that he or she is relinquishing all rights to the property. If the non-purchasing spouse executes the security instrument for such reasons, he or she is not considered a borrower for our purposes and need not sign the loan application. In all other cases, the non-purchasing spouse is not to appear on thesecurity instrument or otherwise take title to the property at loan settlement.Except for those obligations specifically excluded by state law, the debts of the no purchasing spouse must be considered in the qualifying ratios if the borrower resides ina community property state or the property to be insured is located in a communityproperty state. FHA is designed for first-time homebuyers, and low-moderate income households. It isNOT a program for investors. As such, as a rule: In General - Only 1 Mortgage Per Borrower is Allowed!FHA currently limits borrowers to only one FHA mortgage that can be outstanding atany one time. Prior to 1992, each borrower was limited to one high balance (defined asabove 75% LTV) FHA mortgage outstanding at one time, but that is no longer the case.There are a few exceptions to the one FHA mortgage rule for hardship situations:• Relocationso If not within reasonable commuting distance to current residenceo Need not be employermandated• Increase in Family Sizeo Must provide proof of increased dependents and inadequate current residenceo Must pay down current mortgage to 75% LTV or less (via appraisal).• Vacating Jointly Owned Propertyo Divorce situations• Non-Occupying Co-Borrowero May have interest in their OWN personal residence which is FHA-insuredIn all other cases, the purchasing borrower must payoff the current FHA loan, orterminate their interest in the property.

Differences between FHA and conventional mortgages

admin — Fri, 21 Mar 2008 09:21:00 GMT

The Federal Housing Administration provides a loan guarantee program in lieu of private mortgage insurance so qualified borrowers can get a mortgage loan with a low down payment.

The FHA doesn't lend you the money, they guarantee the loan, so the lender doesn't take on a financial risk by extending you credit. The U.S. Department of Housing and Urban Development Web site can help you find HUD-approved counselors in your area who can answer your questions about FHA loans, specific to your situation.

The most popular FHA loan has a minimum cash investment requirement of 3 percent but permits 100 percent of the money needed at closing to be a gift from a relative, nonprofit organization or government agency.

FHA lending guidelines are not as strict as the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Sellers must pay part of the closing costs, while some of the borrower's closing costs can be included in the loan amount.

FHA loans are assumable, meaning you can transfer your loan to the new owner if you sell your house. That allows the new owner to take over your FHA loan without the additional cost of obtaining a new loan. To assume the loan, the buyer has to meet the credit standards for the loan. This feature can make it easier to sell your home.

There are three FHA loan programs:

1. FHA 203(b) fixed-rate mortgage (15- or 30-year loans)
2. FHA 251 adjustable-rate mortgage
3. FHA 2-1 buy-down loans

There's also an Energy Efficient Mortgages program that allows homeowners to finance adding energy-efficient features to new or existing homes as part of either their home purchase or FHA refinancing.

The biggest disadvantage to FHA loans is the mortgage insurance premium. In most 15- or 30-year FHA loans, the borrower pays 1.5 percent of the loan amount at closing, along with a 0.5 percent annual renewal premium paid annually over the life of the loan.

Unlike private mortgage insurance, the mortgage insurance premium isn't canceled when the homeowner's equity reaches a target level. You may qualify, however, for a partial refund of the upfront mortgage insurance premium if you owned your home for less than five to seven years. It's five years for loans closed after Jan. 1, 2001 and seven years for loans closed before Jan. 1, 2001 and after September 1983.

You need to shop rates when looking for a FHA mortgage just as you would with a conventional loan because the rates are established by the lender, not the government. FHA loan rates are typically higher than conventional (nongovernment guaranteed) loan rates but shouldn't be a lot higher unless you have credit problems.

Before you start applying for loans you should request a copy of your credit report from at least one of the three major credit bureaus and get a credit score from them as well. Review the report for errors. If you find any, use the dispute-resolution process to correct the report. Bankrate provides contact information for the credit bureaus and a guide to handling the dispute-resolution process.

By Dr. Don Taylor • Bankrate.com

FHA Loan & VA Loan

admin — Fri, 21 Mar 2008 08:53:00 GMT

FHA Loan

VA Loan

FHA Loan and VA Loan provides affordable home loans for purchase or refinance

Little or NO Money Down

100% of the Down Payment
can be a Gift

Non-occupant co-borrowers
are allowed to assist in
qualifying for the loan

FHA loans are assumable
under certain conditions.
(Conventional fixed rate loans seldom are.)

The Seller is required to pay
Processing fee,
Document Prep Fee, and the
Tax Service Fee in an FHA loan

The VETERAN can literally move in WITHOUT any of their own funds!

NO Down Payment Up to $359,650

100% of the Down Payment
can be a Gift
VA loans allow the borrower to use 100% gift moneys for the down payment.

Closing costs can be paid
by the seller, or
gifts funds may be used

No Closing Cost

Easier qualifying standards

No prepayment penalties


FHA Loan		VA Loan

Credit history DOES NOT have to be spotless to obtain financing through
FHA Loan and VA Loan

Bankruptcies
2 years from date of discharge
No late payments in the last 12 months

Foreclosures
Must be more than 3 years old
No late payments in the last 12 months

Repossessions
Must be more than 2 years old
No late payments in the last 12 months

Late Payments
No late payments in the last 12 months

Bankruptcies
2 years from date of discharge
No late payments in the last 12 months

Foreclosures
Must be more than 3 years old
No late payments in the last 12 months

Repossessions
Must be more than 2 years old
No late payments in the last 12 months

Late Payments
No late payments in the last 12 months

Underwriting guidelines for VA loans are even more specific.

For example, a borrower may be able to get a VA loan one year after discharge of a Chapter 7 if the borrower is re-establishing credit and can demonstrate that the bankruptcy was due to circumstances beyond their control such as "medical bills not covered by insurance," according to the The VA Lender’s Handbook by Allregs.

According to HUD / FHA

For example, loans may be permitted for consumers who have discharged their bankruptcy as recently as one year ago if the borrower can demonstrate "extenuating circumstances beyond the control of the borrower." Documenting the fact that an unexpected illness caused high medical bills would be one way to address this guideline and help the borrower get an FHA loan.

FHA Mortgage Limits List

admin — Fri, 21 Mar 2008 08:49:00 GMT

FHA Mortgage Limits List - FHA Forward

Message: MORTGAGE LIMITS SUCCESSFULLY COMPLETED

Mortgage maximums as of Thursday March 20, 2008
(58 records were selected, records 1 through 50 displayed)

MSA Name	MSA Code	Division	County Name	County Code	State	One-Family	Two-Family	Three-Family	Four-Family	Last Revised
OAKLAND-FREMONT-HAYWARD, CA METROPOLITAN DIVISION	41860	36084	ALAMEDA	001	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
NON-METRO	99999		ALPINE	003	CA	$547,500	$700,900	$847,200	$1,052,900	03/05/2008
NON-METRO	99999		AMADOR	005	CA	$443,750	$568,050	$686,650	$853,350	03/05/2008
CHICO, CA (MSA)	17020		BUTTE	007	CA	$400,000	$512,050	$618,950	$769,250	03/05/2008
NON-METRO	99999		CALAVERAS	009	CA	$462,500	$592,050	$715,700	$889,450	03/05/2008
NON-METRO	99999		COLUSA	011	CA	$397,500	$508,850	$615,100	$764,400	03/05/2008
OAKLAND-FREMONT-HAYWARD, CA METROPOLITAN DIVISION	41860	36084	CONTRA COSTA	013	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
CRESCENT CITY, CA (MICRO)	18860		DEL NORTE	015	CA	$311,250	$398,450	$481,650	$598,550	03/05/2008
SACRAMENTO--ARDEN-ARCADE--ROSEVILLE, CA (MSA)	40900		EL DORADO	017	CA	$580,000	$742,500	$897,500	$1,115,400	03/05/2008
FRESNO, CA (MSA)	23420		FRESNO	019	CA	$381,250	$488,050	$589,950	$733,150	03/05/2008
NON-METRO	99999		GLENN	021	CA	$287,500	$368,050	$444,900	$552,900	03/05/2008
EUREKA-ARCATA-FORTUNA, CA (MICRO)	21700		HUMBOLDT	023	CA	$393,750	$504,050	$609,300	$757,200	03/05/2008
EL CENTRO, CA (MSA)	20940		IMPERIAL	025	CA	$325,000	$416,050	$502,900	$625,000	03/05/2008
BISHOP, CA (MICRO)	13860		INYO	027	CA	$437,500	$560,050	$677,000	$841,350	03/05/2008
BAKERSFIELD, CA (MSA)	12540		KERN	029	CA	$368,750	$472,050	$570,600	$709,150	03/05/2008
HANFORD-CORCORAN, CA (MSA)	25260		KINGS	031	CA	$325,000	$416,050	$502,900	$625,000	03/05/2008
CLEARLAKE, CA (MICRO)	17340		LAKE	033	CA	$401,250	$513,650	$620,900	$771,650	03/05/2008
SUSANVILLE, CA (MICRO)	45000		LASSEN	035	CA	$285,000	$364,850	$441,000	$548,050	03/05/2008
LOS ANGELES-LONG BEACH-GLENDALE, CA METROPOLITAN D	31100	31084	LOS ANGELES	037	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
MADERA, CA (MSA)	31460		MADERA	039	CA	$425,000	$544,050	$657,650	$817,300	03/05/2008
SAN FRANCISCO-SAN MATEO-REDWOOD CITY, CA METROPOLI	41860	41884	MARIN	041	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
NON-METRO	99999		MARIPOSA	043	CA	$412,500	$528,050	$638,300	$793,250	03/05/2008
UKIAH, CA (MICRO)	46380		MENDOCINO	045	CA	$512,500	$656,100	$793,050	$985,600	03/05/2008
MERCED, CA (MSA)	32900		MERCED	047	CA	$472,500	$604,900	$731,150	$908,650	03/05/2008
NON-METRO	99999		MODOC	049	CA	$271,050	$347,000	$419,400	$521,250	03/05/2008
NON-METRO	99999		MONO	051	CA	$462,500	$592,050	$715,700	$889,450	03/05/2008
SALINAS, CA (MSA)	41500		MONTEREY	053	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
NAPA, CA (MSA)	34900		NAPA	055	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
TRUCKEE-GRASS VALLEY, CA (MICRO)	46020		NEVADA	057	CA	$562,500	$720,100	$870,450	$1,081,750	03/05/2008
SANTA ANA-ANAHEIM-IRVINE, CA METROPOLITAN DIVISION	31100	42044	ORANGE	059	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
SACRAMENTO--ARDEN-ARCADE--ROSEVILLE, CA (MSA)	40900		PLACER	061	CA	$580,000	$742,500	$897,500	$1,115,400	03/05/2008
NON-METRO	99999		PLUMAS	063	CA	$410,000	$524,850	$634,450	$788,450	03/05/2008
RIVERSIDE-SAN BERNARDINO-ONTARIO, CA (MSA)	40140		RIVERSIDE	065	CA	$500,000	$640,100	$773,700	$961,550	03/05/2008
SACRAMENTO--ARDEN-ARCADE--ROSEVILLE, CA (MSA)	40900		SACRAMENTO	067	CA	$580,000	$742,500	$897,500	$1,115,400	03/05/2008
SAN JOSE-SUNNYVALE-SANTA CLARA, CA (MSA)	41940		SAN BENITO	069	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
RIVERSIDE-SAN BERNARDINO-ONTARIO, CA (MSA)	40140		SAN BERNARDINO	071	CA	$500,000	$640,100	$773,700	$961,550	03/05/2008
SAN DIEGO-CARLSBAD-SAN MARCOS, CA (MSA)	41740		SAN DIEGO	073	CA	$697,500	$892,950	$1,079,350	$1,341,350	03/05/2008
SAN FRANCISCO-SAN MATEO-REDWOOD CITY, CA METROPOLI	41860	41884	SAN FRANCISCO	075	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
STOCKTON, CA (MSA)	44700		SAN JOAQUIN	077	CA	$488,750	$625,700	$756,300	$939,900	03/05/2008
SAN LUIS OBISPO-PASO ROBLES, CA (MSA)	42020		SAN LUIS OBISPO	079	CA	$687,500	$880,100	$1,063,850	$1,322,150	03/05/2008
SAN FRANCISCO-SAN MATEO-REDWOOD CITY, CA METROPOLI	41860	41884	SAN MATEO	081	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
SANTA BARBARA-SANTA MARIA, CA (MSA)	42060		SANTA BARBARA	083	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
SAN JOSE-SUNNYVALE-SANTA CLARA, CA (MSA)	41940		SANTA CLARA	085	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
SANTA CRUZ-WATSONVILLE, CA (MSA)	42100		SANTA CRUZ	087	CA	$729,750	$934,200	$1,129,250	$1,403,400	03/05/2008
REDDING, CA (MSA)	39820		SHASTA	089	CA	$423,750	$542,450	$655,700	$814,900	03/05/2008
NON-METRO	99999		SIERRA	091	CA	$285,000	$364,850	$441,000	$548,050	03/05/2008
NON-METRO	99999		SISKIYOU	093	CA	$293,750	$376,050	$454,550	$564,900	03/05/2008
VALLEJO-FAIRFIELD, CA (MSA)	46700		SOLANO	095	CA	$557,500	$713,700	$862,700	$1,072,150	03/05/2008
SANTA ROSA-PETALUMA, CA (MSA)	42220		SONOMA	097	CA	$662,500	$848,100	$1,025,200	$1,274,050	03/05/2008
MODESTO, CA (MSA)	33700		STANISLAUS	099	CA	$423,750	$542,450	$655,700	$814,900	03/05/2008

Selection criteria

Sorted by:	County
State:	CA
County:
County Code:
MSA Name:
MSA Code:
Limit Type:	FHA Forward
Last Revised:

The current basic standard mortgage limits for FHA insured loans are:
		One-family	Two-family	Three-family	Four-family
	FHA Forward	$271,050.00	$347,000.00	$419,400.00	$521,250.00
	HECM	$200,160.00
	Fannie/Freddie	$417,000.00	$533,850.00	$645,300.00	$801,950.00

High cost area limits are subject to a ceiling based on a percent of the Freddie Mac Loan limits The ceilings are currently:
		One-family	Two-family	Three-family	Four-family
	FHA Forward	$729,750.00	$934,200.00	$1,129,250.00	$1,403,400.00
	HECM	$362,790.00
	Fannie/Freddie	$729,750.00	$934,200.00	$1,129,250.00	$1,403,400.00

Section 214 of the National Housing Act provides that mortgage limits for Alaska, Guam, Hawaii, and the Virgin Islands may be adjusted up to 150 percent of the new ceilings. This results in new ceilings for these areas of:
		One-family	Two-family	Three-family	Four-family
	FHA Forward	$1,094,625.00	$1,401,300.00	$1,693,875.00	$2,105,100.00
	HECM	$544,185.00
	Fannie/Freddie	$1,094,625.00	$1,401,300.00	$1,693,875.00	$2,105,100.00

FHA Home Mortgage Purchase or Refinance Loan - Why You Might Consider Getting an FHA Loan

admin — Thu, 20 Mar 2008 08:42:00 GMT

Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don't realize that FHA loans can also be does for refinancing. They are not only for purchasing a house.

HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house. If the borrower falls within FHA's requirements FHA insures the loan for the lender, which makes the loan very low risk for the lender, which is very good for the borrower. It could mean a lower interest rate, better terms and just an overall better loan.

FHA's requirements are; a down payment of 3-5%, the home must be under the FHA's set loan limit for the county that the borrower lives in and a few other small requirements.

The main advantage to an FHA loan, is if you can fall within their requirements, your credit history or income level, will not hold you back from getting a home loan. If you are getting turned down from other lenders because of a high debt to income ratio or because your credit is bad. You may want to consider applying for an FHA loan, where those requirements are either non-existant or much more flexible.

If the idea of down payment is holding you back, consider also, that FHA loans allow the use of a non-profit organization as a source for the down payment, which opens up the option of using down payment assistance programs like Neighborhood Gold.

Free Article

FHA Mortgage Advice and Home Loan FAQs

admin — Thu, 20 Mar 2008 08:23:00 GMT

How can I buy a HUD Home?
Anyone can purchase a HUD Home as long as you have the cash to purchase the home or you can qualify for a loan to purchase it. HUD Homes are sold through a bid process and you will need a HUD-approved real estate agent to assist you with that bid process. HUD will even pay that real estate agent's fee.

HUD Homes are sold "as-is," without warranty. That means that HUD will not pay to correct any problems. But even if a HUD Home needs fixing up - and not all of them do - it can be a real bargain! For example, HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. HUD might offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. And keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs. Your real estate agent will have details. We encourage you to get the home professionally inspected before you make an offer so you will know what repairs you may have to make BEFORE you submit your bid.

Start your HUD Home buying process by finding a participating real estate agent. Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an "Offer Period." At the end of the Offer Period, all offers are opened and, basically, the highest reasonable bid is accepted. If the home isn't sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. They will be opened the next business day. If your bid is acceptable to HUD, your real estate agent will be notified, usually within 48 hours. You'll be given a settlement date, normally within 30-60 days, by which you need to arrange financing and close the sale.

How can FHA help me buy a home?
FHA insured mortgages offer many benefits and protections that only come with FHA:

Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

Less than Perfect Credit: You don't have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan.

Low Down Payment: FHA loans have a low 3% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don't allow this.

Costs Less: FHA loans have competitive interest rates because the Federal government insures the loans. Always compare an FHA loan with other loan types.

Helps You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.

FHA does not provide direct financing nor does it set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. In order to initiate the loan application process, please contact an FHA approved lender.

An FHA insured mortgage may be used to purchase or refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation).

What are the advantages of refinancing to a fixed rate FHA mortgage?
There are significant advantages to refinancing to an FHA mortgage with a fixed interest rate, particularly if you currently have a higher cost mortgage or have a mortgage that has an adjustable or a variable interest rate, optional payments or interest only payments that will increase in the near future. Borrowers with adjustable or variable interest rate mortgages or interest only payment mortgages often encounter much higher monthly payments ("payment shock") after having the mortgage for just a few years.

FHA fixed interest rate mortgages cost less. FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a subprime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments.

You don't have to have perfect credit to get an FHA fixed rate mortgage. Even if you have had credit problems, such as a bankruptcy, you may still qualify for an FHA mortgage. Should you encounter hard times after refinancing your home, FHA has programs to help you keep you in your home and avoid foreclosure.

An FHA fixed interest rate mortgage may be used to refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation).

What are the basic eligibility requirements for FHA financing?
FHA insures mortgages made by approved lenders to individuals and non-profit and government agencies that are approved to participate in HUD's programs; HUD does not loan money to homebuyers.

Generally, to be eligible for an FHA loan, you must have a valid social security number and have lawful residency in the United States and be of a legal age to sign on a mortgage in your state. Lenders will verify income, assets, liabilities, and credit history for all parties on the loan. With an FHA loan, you cannot take an ownership interest in a property without qualifying for the loan.

FHA's mortgage programs do not typically have maximum income limits for qualifying, although you must have sufficient income to qualify for the mortgage payment and other debts. Income limits may be present when qualifying for down payment assistance or other secondary financing programs (including those funded by HUD) that may be used in conjunction with an FHA loan.

FHA does not have minimum credit score requirements, although past credit performance serves as the most useful guide in determining a borrower's attitude toward credit obligations and predicting a borrower's future actions. Using FHA's guidelines, lenders will make a credit determination based on the merits of each case. To find out if you qualify, and how much you can borrow based on your income and debts, you should contact a HUD-approved lender.

What is the FHASecure refinance program?
Under the new "FHASecure" refinance program, FHA will allow families with acceptable credit histories who had been making timely mortgage payments before the interest rate on their adjustable rate mortgages reset-but are now in default-to qualify for refinancing to an FHA mortgage.

The basic requirements of the FHASecure program are:

*The mortgage being refinanced must be a non-FHA Adjustable Rate Mortgage (ARM) and the interest rate has reset.

*The homeowner is now delinquent in making payments on the mortgage after the reset.

* The homeowner's payment history must show that, prior to the reset of the interest rate on the mortgage, the homeowner was current in making the monthly mortgage payments, i.e., the homeowner's mortgage payment history during the 6 months prior to the interest rate reset showed no instances of making mortgage payments outside the month due.

* The homeowner has sufficient income to qualify for an FHA mortgage.

If there is sufficient equity in the home, FHA will allow missed mortgage payments to be included in the FHA refinance mortgage, if the arrearages arose after the interest rate reset or the homeowner may be able to use a second mortgage to finance the missed payments.

How can FHA help me if I am behind in my mortgage payments?
FHA insures your mortgage; therefore, your lender has to follow FHA servicing guidelines and regulations. You should first contact your lender’s Loss Mitigation Division to seek a workout solution, but if your lender is non-responsive, then you will need to contact FHA’s National Servicing Center. All requests for information or clarification of policy on servicing related issues should be directed to the FHA National Servicing Center (NSC).

How does HUD define a first time homebuyer?
FHA defines a first-time homebuyer (FTHB) as an individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase (closing date) of the property. A FTHB includes any individual that has only owned with a former spouse while married. A FTHB would also include an individual who has only owned a principal residence not permanently affixed to a permanent foundation, or a property that was not in compliance with State, local, or model building codes and cannot be brought into compliance for less than the cost of constructing a permanent structure.

Can I use FHA financing to acquire a second home?
A secondary residence is a property the borrower occupies in addition to his or her principal residence. Secondary residences are only permitted when the appropriate Home Ownership Center (HOC) agrees that an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is not available for lease in the area or within reasonable commuting distance to work, and the maximum loan amount is 85 percent of the lesser of the appraised value or sales price. Direct Endorsement (DE) lenders are not authorized to grant hardship exceptions. Any
request for a hardship exception must be submitted by the lender in writing to the appropriate HOC. HOC jurisdictions are listed in Appendix I of HUD Handbook 4155.1 REV-5. A borrower may have only one secondary residence at any time. All the following conditions must be met for secondary residences:

A. The secondary residence must not be a vacation home or otherwise used primarily for recreational purposes; and

B. The borrower must obtain the secondary residence because of seasonal employment, employment relocation, or other circumstances not related to recreational use of the residence; and

C. There must be a demonstrated lack of affordable rental housing meeting the needs of the borrower in the area or within a reasonable commuting distance of the borrower's employment. Documentation to support this must include:

1. A satisfactory explanation from the borrower of the need for a secondary residence and the lack of available rental housing in the area that meets the need.

2. Written evidence from local real estate professionals who verify a lack of acceptable rental housing in the area.

What is the Low/Moderate Income Families Program?
The Section 221(d)(2) Low/Mod Income Families program was designed to increase homeownership opportunities for low- and moderate-income families however, this particular program was eliminated in February 2001.

The program currently serving low and moderate income families, is the basic FHA loan, Section 203(b). This program requires a low down payment of 3 percent and less stringent underwriting than conventional mortgages. For more information on FHA insured mortgages, contact an FHA approved lender.