14. Which of the following is NOT a characteristic of FHA loans?A.Maximum loan amount which varies from area to areaB.Minimum cash investment of 3.5%C.Mortgage insurance is requiredD.No downpayment is requiredCorrect Answer:DYour Answer:D(Correct!)Explanation:FHA loans require at least a small downpayment. The borrower must make aminimum cash investment of at least 3.5% of the sales price, which may include closing costs aswell as any downpayment. Show
15. An FHA borrower generally may not exceed a _____ fixed payment to income ratio and a_____ housing expense to income ratio. Get answer to your question and much more
16. To obtain FHA insurance for an adjustable-rate loan, a borrower would use a: Get answer to your question and much more We have textbook solutions for you! The document you are viewing contains questions related to this textbook. Financial Markets & Institutions Madura D.Section 251 loanCorrect Answer:DYour Answer:D(Correct!)Explanation:Section 251 loans are used to insure adjustable-rate loans for the purchase ofowner-occupied residences with up to four units.17. An FHA borrower will not need to have cash available at closing for: Get answer to your question and much more 18. An FHA buyer would apply for a Section 203(k) loan to:A.buy a property in an older, declining neighborhoodB.purchase and rehabilitate a propertyC.use a graduated payment mortgageD.use an adjustable-rate mortgageCorrect Answer:BYour Answer:B(Correct!)Explanation:Section 203(k) loans are targeted to home buyers who intend to purchase andthen rehabilitate a fixer-upper property. 19. An FHA loan would be appropriate for a/an: Get answer to your question and much more 20. An FHA loan's annual mortgage premiums will vary between _____ and _____ of the loanbalance. Get answer to your question and much more Congratulations, you passed this quiz!Click here when you arefinished reviewing. End of preview. Want to read all 7 pages? Upload your study docs or become a Course Hero member to access this document Tags Correct Answer, Mortgage loan, minimum cash investment FHA Loan RequirementsFHA loans are used for more than 25% of all home purchases in the United States. Understanding the FHA loan requirements well before you begin shopping for a home will help make the whole process much easier. There are specific FHA guidelines that are published in the FHA handbook and since there are hundreds of pages to read through, we outlined the key points that you need to know. The basic FHA loan requirements include credit scores of at least 580, a 3.5% down payment, and a two year work history. Why Get an FHA Loan and Who are They For?If you have good credit and at least 20% to put down, then it is possible that an FHA loan is not the perfect fit for you. However, if your credit scores are lower, or you have little to put down and possibly have a lot of debt, then you should seriously consider an FHA loan. In general, FHA loans are perfect for people who fit following criteria:
FHA Loan Requirements for 2022These are the minimum FHA loan requirements when trying to qualify for an FHA loan.
If you believe you may not meet all of these FHA loan requirements, then we suggest speaking with a loan officer. There are ways to overcome challenges which may have prevented you from qualifying in the past. *FHA Loan Requirements Chart
FHA Loan BenefitsThese are the benefits of an FHA loan versus a conventional loan:
FHA loan disadvantages versus a conventional loan:
FHA Credit RequirementsAt one point, you needed a FICO score of 640 to qualify for an FHA loan. Now, you can get an FHA loan with a FICO score as low as 500. As detailed in the image below, the down payment requirement would increase once your credit score drops below 580. Although there are minimum credit requirements for FHA loans, lenders have the option to implement stiffer requirements as an added measure of risk mitigation for them. This is why not all FHA lenders will actually help if your credit score is below 580. Here at FHA Lenders, we have aligned ourselves with lenders who do accept the lower credit scores. There are also FHA loan requirements related to collections and other items on your credit report which need to be understood. For example, medical disputes can be excluded from the credit analysis during the underwriting process of your FHA mortgage application. Read more about the FHA Credit Requirements if you have any additional questions. FHA Down Payment RequirementsThe FHA down payment requirements are 3.5% of the purchase price if your credit score is 580 or higher. If your score is below 580, then you will be required to put 10% down. If you do not have the down payment, then read about FHA gift funds and learn how you can get a gift from a relative to use for your down payment. If you do not have the down payment now, but will sometime in the near future, then connect with one of our FHA lenders here and begin the discussion. They will help guide you through the process and prepare you for a successful real estate transaction. FHA Debt to Income Ratio RequirementsThe FHA debt to income (DTI) requirements in general are 31% for only housing related expenses, and 43% for the total debt including the proposed housing expenses and all other monthly debt that appears on the credit report. The FHA guidelines permit lenders the flexibility to allow for a total DTI of up to 50% if there are additional compensating factors such as no payment shock, a high level of cash reserves, or additional income that may not be documented on the loan application. The debt to income ratio calculations are as follows: Front End Ratio – Housing Only Back End Ratio –
Total Debt to Income Ratio In the scenario above, the debt to income ratios are 30% / 37% which is well within the FHA guidelines for debt ratios. Read more about FHA DTI Requirements. FHA Closing Cost RequirementsFHA loans also have closing costs and depending upon the loan amount your closing costs may be anywhere from 2.5% – 5% of the total loan amount. Read more about FHA closing costs so you can be prepared for what to expect. The closing costs can be covered by the seller of the home and negotiated during the home purchase. These are some of the basic FHA closing costs that you can expect to see.
Some of the closing costs may be financed or can be covered by the seller as mentioned above. If you received FHA gift funds, you could use any excess funds from your down payment to cover closing costs too. Read more about FHA closing costs in greater detail. We will outline everything for you and help you to understand what you can expect to pay for each of the items listed above. Mortgage Insurance Premium (MIP)FHA loan requirements also include a mortgage insurance premium. There is the upfront mortgage premium of 1.75% of the loan amount which gets paid at closing. Then you have the annual mortgage insurance premium which gets split equally across your monthly mortgage payments. The mortgage insurance premium is an insurance policy that protects the lender in the event that you default on the loan. This is something that needs to be considered when applying for an FHA home loan. In our dedicated article about mortgage insurance premiums, we will provide you with the calculations, all of the rules regarding the FHA MIP and also whether you can get it removed from your mortgage. The image below details how the annual or monthly mortgage insurance premium rates are determined. The percentages to the right are applied against your initial loan amount. FHA Documentation RequirementsWhen you apply for an FHA loan, you must provide the following documentation:
At the time of application, there may be additional documents required. FHA Property RequirementsFHA loans can be used to purchase primary residences only and they must be single family homes up to a maximum of a 4-unit building. You may purchase a condo that is an FHA approved condo. Use the FHA approved condo lookup tool to determine whether the condo you are interested in buying qualifies for an FHA loan. Additional FHA property requirements:
Read more about FHA approved homes. FHA Loan LimitsThe FHA loan requirements also outline very specific loan limits for each county. For 2019, the loan limit for a single family residence was raised to 420,680 and up to $970,800 for designated high cost counties. Those loan limits are even higher for 2 unit, 3 unit, and 4 unit properties. Check out the FHA Loan Limits lookup page to determine what the loan limits are in your county. FHA Appraisal RequirementsEvery home purchased with an FHA insured loan must have an appraisal performed by an approved appraiser. The appraisal is needed to make sure the home is worth what the home buyer is paying for the home. Not only does it protect the buyer, but it also protects the lender from losses. In addition to evaluating the value of the property, an FHA appraisal will also look for the following:
FHA Loan Requirements for SellersFrom a lending perspective, there are no specific FHA loan requirements for the sellers of a home that will be financed with an FHA insured mortgage. However, sellers can do a lot to help make their home better suited to be sold to someone who plans to use FHA financing. You can see from the appraisal checklist that the home must pass a thorough inspection. As a seller, it is important to make sure that your home meets all of the requirements set for an FHA approved home. You must also be mindful of how you price your home. If there is a high concentration of FHA financed homes in your area, then you could use that to your advantage when pricing your home. Think about the future negotiation that may occur as it relates to covering borrower closing costs. FHA Loan Requirements – SummaryThere are quite a few FHA loan requirements when it comes to qualifying, documentation and various other requirements. However, FHA loans are the best option for at least 25% of the United States population. An FHA loan is a great way to finance your home so let us help you to get connected to an FHA lender who is an expert in your area. Related FHA ArticlesPros and Cons of FHA Home Loans – Kyle Hiscock Should You Get an FHA Loan? – Kevin Vitali FHA Underwriting Guidelines – Luke Skar FHA Loans with a Part Time Job FHA Loans with 1099 Income Rules for FHA Homes in a Flood Zone Which of the following would be required in an FHA loan?Qualifying for an FHA loan usually requires a credit score of at least 580, a 3.5 percent down payment, and a debt-to-income ratio of 43 percent or less. Individual lenders have some leeway with these requirements. So if you get turned down by one lender, you may be approved by another.
Which of the following is not a requirement for a FHA loan?Which of the following is NOT a requirement for someone applying for an FHA loan? You chose not to answer this question. Correct Answer: No history of bankruptcy or foreclosure.
Which of the following properties does not qualify for an FHAWhich one of the following properties does NOT qualify for an FHA-insured loan? FHA insures loans for homeowner owner-occupied principal residential purposes. Hotels, motels, bed and breakfasts, fraternity housing, and private clubs are not eligible properties, even if the owner lives on the property.
What are three characteristics of FHA?What is an FHA loan?. Lower credit score requirements for low-down-payment loans than conventional mortgages.. The chance to qualify for a mortgage sooner after a bankruptcy or foreclosure than conventional loans allow.. More leniency than conventional loans permit to qualify with more debt compared to your income.. |
Which of the following is not a requirement for an fha loan?
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