What Are FHA 203i Loans?
This BLOG On FHA 203i Loans Was Updated On April 29, 2017 By Gustan Cho NMLS 873293
HUD, the parent of FHA, launched the FHA 203i Loans to enable home buyers of Outlying Areas possible. FHA 203i Loans enables home buyers qualify for FHA Loans on home purchases outside the city and metropolitan areas. With 203i Loans, it promotes lenders to lend in areas that is outside city limits where the resale of properties are not as easy if the borrower were to default on their FHA insured home loans and the property goes into foreclosure. FHA 203i Loans are geared towards home purchases outside city and suburbs. These loans will benefit home buyers in rural locations and farm areas.
HUD Guidelines On 203i Loans
HUD Section 203(i) provides FHA mortgage insurance for lenders who originate home loans for home buyers to purchase home buyers of owner occupant properties in rural areas of the United States. FHA is not a mortgage lender nor does it have anything to do with the origination and/or funding or servicing of FHA Loans.
ALL FHA LOANS are originated and funded by the following institutions:
- Mortgage companies
- FDIC Bank who are HUD Approved
- Savings And Loan Associations
- Mortgage Brokers who have direct and/or indirect relationships with HUD approved lenders
- Any other mortgage banking companies who is HUD approved
What Are Eligibility Requirements For 203i Loans?
- Borrower must meet standard FHA credit and income qualification requirements.
- 203i Loans are for owner occupant properties and homeowner needs to be owner occupant and the subject property needs to be the primary resident of the borrower.
- Borrower is eligible for approximately 97% financing with only a 3% down payment from his or her own funds.
- The down payment can be gifted by family members or friends.
- The friends who gift the down payment need to have known the borrower for at least 5 years.
- Borrower is able to finance closing costs and the up front mortgage insurance premium into the mortgage.
- How lender credit works is that the mortgage borrower accepts a higher interest rate in return for a concession by the lender to cover closing costs, which includes title charges, tax stamps, transfer stamps, attorneys fees, loan origination fees, appraisal fees, and other fees associated with closing the mortgage loan.
- Prepaid tax and insurance escrow can be also be included as part of the closing costs and the borrower can get concessions towards it.
- The borrower will also be responsible for paying an annual premium.
- Eligible properties are one to four unit owner occupant properties, including farm housing located on 2 acres or more of land adjacent to an all weather road.
If you need more information on FHA 203i Loans, please contact The Gustan Cho Team at 262-878-1965 or text Gustan at 262-716-8151. You can also email us at firstname.lastname@example.org.