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FHA mortgage lenders are regulated divisions of the U.S. Department of
Housing and Urban Development (HUD). FHA's primary objective is
to assist in providing housing opportunities for low to moderate income
families. FHA offers 15 and 30 year fixed-rate mortgages.
FHA has both single family (1-4 unit homes) and multi-family (5 or more
units) mortgage lending programs. FHA also has 1 year adjustable
mortgage, plus, offers a reverse mortgage
to senior citizens through the " Home Equity Conversion Mortgage"
program, or "HECM".
FHA (Federal
Housing Administration): Insures ( not funds) loans allowing
a low down payment for purchase, ranging from 2.20% to 5%. Monthly
mortgage insurance (MIP) is overall less expensive compared to conventional
loans private mortgage insurance (PMI). FHA also guarantees rights
and privileges of home ownership to a surviving spouse.
FHA has no
minimum loan requirement but does establish maximum loan amounts per County.
Points (prepaid interest) can be charged by the lender, but since the
FHA rate is no longer regulated by HUD, the purchaser may negotiate the
rate and points. FHA loans have somewhat more relaxed qualifying
standards and ratios than conventional loans.
FHA Mortgage
Advantages
- FHA offers
more relaxed credit quality, income, and asset requirements.
- Permits
a buyer to assume seller loans with no adjustment to the rate
- Lower
initial interest rates
- Lower
down payment of 2.25% of purchase value (lowest Conventional at 3%)
- Down
payment and closing costs can be gifted by a friend, relative or co-worker.
- Higher
debt ratios allowed (can qualify for larger loan amount)
- No income
limits
- Only
12 months good credit history (late payments, collections, and bankruptcies,
are O.K.)
- Non-occupant
co-borrowers allowed
- Sellers
can pay all closing costs
- MIP (mortgage
insurance premium) upfront fee may be included in loan
- MIP monthly
cost is less than Standard Conventional until property has 85% or more
equity
- No new
appraisal or credit report requires to refinance for a lower rate
- All FHA
loans are readily assumable mortgages ( conventional rarely are)
- Protection
for borrower and heirs from loan balance exceeding home value
- FHA home
rehabilitation loan allows additional money borrowed to purchase price
for home improvements
FHA Mortgage
Disdvantages
- Loan
limit set by county
- Upfront
MIP required at close See Insurance
- MIP upfront
fee (Standard Conventional financing doesn't charge this fee)
FHA
Streamline Mortgages
FHA Streamline refers to a No cash-out refinance loan for
a pre-existing FHA insured mortgage. Streamline refers to the fact
that only the minimum amount of documentation and underwriting is required
to complete the refinance transaction.
The
basic requirements of a streamline refinance requires the existing FHA
insured mortgage be current (not delinquent), and the reason to refinance
is to lower the rate or term with NO CASH OUT.
FHA Reverse
Mortgages for Seniors
An FHA Reverse Mortgage, also known as the Home Equity Conversion Mortgage
or "HECM", offers senior citezens over the age of 62, a way
to increase their cash flow. Seniors retain ownership of their property
and receive cash, or a monthly check representing a portion of the equity
in the property.
The income
received from the loan is tax free, with no repayment of the loan required
as long as the borrowers reside in the home. Repayment is only due
when the property is sold, the owner dies, or vacates the property for
6 months, or an agreed upon date is reached.
The criteria
for obtaining an FHA Reverse Mortgage are simple. Existing home
mortgages, deferred taxes or any federal debt must be paid in full, or
paid out of the loan proceeds. Borrower is at least 62 years of
age with a "single family residence". Condominiums and
Planned Unit Developments (PUD's) may be eligible if they are in an FHA
approved project. Duplexes through four units are not eligible at
this time.
FHA
Basic Loan Qualifying Summary
FHA
loans are the easiest type of real estate mortgage loan to qualify for.
Following
is the basic FHA loan qualification guidelines:
- Two Years
of steady employment, preferably with same employer
- Last two
years Income should be the same or increasing
- Credit
report should typically have less than two thirty day lates in last
two years
- Bankruptcy's
must be at least two years old, with good credit since
- Foreclosure's
must be at least three years old, with good credit since
- Your new
mortgage payment should be approximately 30% of your gross income
If
you have answered yes to most of these statements, you probably qualify
for a FHA mortgage loan.
Borrowers
total monthly housing expense (P.I.T.I.) suggested by FHA is 29%
of your income although 35% will be accepted as long as borrower provides
adequate proof that mortgage payment will be met.
Calculated
as follows: Gross Monthly Income X 29% = Mortgage Payment.
| Minimum
Credit Score |
No
Credit Score Requirement |
| Minimum
Loan Amount |
No
Minimum |
| Maximum
Loan Amount For Single Family Residences |
See
Below to see County limits. |
| Maximum
Loan to Value (purchases and no cash out refinances) |
97.75%
loans above $50,000 |
| 98.75%
loans less than $50,000 |
| Maximum
Loan to Value (cash out refinances) |
85% |
FHA
Loan Limits for Colorado
FHA's maximum loan amounts varies, depending upon
the county where you live. loan amount, including closing costs
can not exceed the maximum loan amount in your county set by FHA.
Following
are the current FHA loan limits listed by county and property type.
Refine your search by scrolling down the list to the county in which the
property will be located in, then across for the property type.
County loan
limits reposted when FHA informs us of changes (last updated April 2003)
| County |
SingleFamily |
2Units |
3Units |
4
Units |
| Adams |
$261,609.00 |
$334,863.00 |
$404,724.00 |
$480,000.00 |
| Alamosa |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Arapahoe |
$261,609.00 |
$334,863.00 |
$404,724.00 |
$480,000.00 |
| Archuleta |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Baca |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Bent |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Boulder |
$257,925.00 |
$290,505.00 |
$352,950.00 |
$407,250.00 |
| Chaffee |
$146,110.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Cheyenne |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Clear
Creek |
$204,250.00 |
$230,050.00 |
$279,500.00 |
$322,500.00 |
| Conejos |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Costilla |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Crowley |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Custer |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Delta |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Denver |
$261,609.00 |
$334,863.00 |
$404,724.00 |
$480,000.00 |
| Dolores |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Douglas |
$261,609.00 |
$334,863.00 |
$404,724.00 |
$480,000.00 |
| Eagle |
$261,609.00 |
$334,863.00 |
$404,724.00 |
$502,990.00 |
| El
Paso |
$194,102.00 |
$218,620.00 |
$265,613.00 |
$306,476.00 |
| Elbert |
$194,655.00 |
$219,243.00 |
$266,370.00 |
$307,350.00 |
| Fremont |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Garfield |
$190,000.00 |
$217,987.00 |
$263,475.00 |
$327,450.00 |
| Gilpin |
$155,563.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Grand |
$161,500.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Gunnison |
$197,553.00 |
$222,507.00 |
$270,335.00 |
$311,925.00 |
| Hinsdale |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Huerfano |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Jackson |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Jefferson |
$261,609.00 |
$334,863.00 |
$404,724.00 |
$480,000.00 |
| Kiowa |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Kit
Carson |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| La
Plata |
$160,550.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Lake |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Larimer |
$185,250.00 |
$208,650.00 |
$253,500.00 |
$292,500.00 |
| Las
Animas |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Lincoln |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Logan |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Mesa |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Mineral |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Moffat |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Montezuma |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Montrose |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Morgan |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Otero |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Ouray |
$199,500.00 |
$224,700.00 |
$273,000.00 |
$315,000.00 |
| Park |
$190,950.00 |
$215,070.00 |
$261,300.00 |
$301,500.00 |
| Phillips |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Pitkin |
$170,362.00 |
$217,987.00 |
$263,475.00 |
$327,450.00 |
| Prowers |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Pueblo |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Rio
Blanco |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Rio
Grande |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Routt |
$205,200.00 |
$231,120.00 |
$280,800.00 |
$324,000.00 |
| Saguache |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| San
Juan |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| San
Miguel |
$261,609.00 |
$304,950.00 |
$370,500.00 |
$427,500.00 |
| Sedgwick |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Summit |
$232,750.00 |
$262,150.00 |
$318,500.00 |
$367,500.00 |
| Teller |
$147,150.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Washington |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
| Weld |
$195,165.00 |
$219,817.00 |
$267,067.00 |
$308,155.00 |
| Yuma |
$144,336.00 |
$184,752.00 |
$223,296.00 |
$277,512.00 |
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LTV
(Loan to value)
- Loan amount divided by property value.
Most
lenders believe borrowers with a low loan-to-value ratio (70%
or greater equity) have a lower probability of a foreclosure than
a borrower with a high loan-to-value ratio (10% equity or less).
Note:
FHA proposes limits to LTV based on loan amount per Low &
High closing cost states.
| FHA
loans LTV in Low
Closing Cost States
98.75% - Property Value $50,000 or less
97.65
% - Property Value > $50,000-125,000
97.15%
- Property Value over $125,000 |
98.75%
- Property Value $50,000 or less
97.75% - Property value over $50,000 |
Low
closing cost states:
AZ, CA,
CO, ID,
IL, IN,
NM, NV,
OR, UT,
WA, WI, WY
5%
max Colorado - ref. Home Ownership and Equity Protection Act of
1994 (HOEPA)
High
closing cost states
- AL, AK, AR, CT, DC, DE, FL, GA, HI, IA, KS, KY, LA, MA, MD, ME,
MI, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NY, OH, OK,
PA, RI, SC, SD, TN, TX, VA, VT, WV.
CLTV
(Cumulative Loan to Value)
- All liens divided
by the value of the property
If
a customer has 2 liens secured against the property, then a Combined Loan
To Value (CLTV) will need to be calculated as well the LTV now becomes
the loan you are working on divided by the value of the home.
MTG
uses the proposed loan amount divided by appraised value
for LTV & CLTV reported to the lender
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