FHA 203i Loans Mortgage Lending Guidelines For Borrowers

This Article Is About The FHA 203i Loans Mortgage Lending Guidelines For Borrowers

HUD, the parent of FHA, launched the FHA 203i Loans to enable home buyers of Outlying Areas possible.

  • FHA 203i Loans enables home buyers to qualify for FHA Loans on home purchases outside the city and metropolitan areas
  • With 203i Loans, it promotes lenders to lend in out the city and county areas
  • Outside Areas 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 the city and suburbs
  • These loans will benefit home buyers in rural locations and farm areas

In this article, we will cover and discuss FHA 203i Mortgage Guidelines.

HUD Guidelines On 203i Loans

HUD Section 203(i) provides government mortgage insurance for lenders who originate home loans for buyers purchasing owner-occupant properties in rural areas of the United States.

  • FHA is not a mortgage lender
  • FHA has nothing to do with the origination and/or funding or servicing of FHA Loans

Who Originates And Fund FHA Home Mortgages

Who Originates And Fund FHA Home Mortgages

ALL FHA LOANS are originated and funded by the following institutions:

  • Mortgage companies
  • FDIC Bank who are HUD Approved
  • Savings And Loan Associations that are HUD Approved

Mortgage Brokers only originate FHA Loans:

  • Mortgage Brokers are not lenders
  • They are the middleman who refers borrowers to lenders
  • Mortgage Brokers need to have direct and/or indirect relationships with HUD-approved lenders
  • Mortgage Brokers gets a commission for referring files to actual lenders

Any other mortgage banking companies who are HUD-approved.

What Are Eligibility Requirements For 203i Loans?

The borrower must meet standard FHA credit and income qualification requirements:

  • 203i Loans are for owner occupant properties and homeowner
  • Borrowers need to be an owner-occupant
  • The subject property needs to be the primary resident of the borrower
  • The 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

The borrower is able to finance closing costs and the upfront mortgage insurance premium into the mortgage.

Sellers Concessions And Lender Credit For Closing Costs

What do the seller's and lender's concessions for closing costs mean?

How lender credit works are borrowers accept a higher interest rate in return for a concession by the lender to cover closing costs. HUD allows up to 6% in sellers concessions by home sellers to offer home buyers to cover their closing costs.

Closing costs include title charges, tax stamps, transfer stamps, attorney 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
  • 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
  • This is 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 Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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  • I am a Senior Citizen. My housing costs including my mortgage payment, condo association fees, and property taxes are paid from my Social Security check.

    My current mortgage is in the form of a Home Equity Loan with a balloon payment of approximately $86,600 due in June which I am unable to meet because I have not been able to find an affordable refinancing option. I have been turned down everywhere due to a high debt to income ratio.

    I am currently paying interest only on the home equity loan. This condominium in Palatine has been my home for decades. There is no other mortgage on my home. I am current with all my accounts. My current lender (Bank Financial, Burr Ridge, Lincolnshire) has been unwilling to offer an extension or refinancing even though I am current and have never missed a payment.

    I am a good candidate for a Reverse Mortgage, but due to my age, remaining mortgage balance, and related costs, I am short of being able to qualify at this time (without bringing money to the table which I am unable to do).

    I need financing to get me through until I am able to qualify for a Reverse Mortgage (which would eliminate my mortgage payments and keep my home safe). Based on current numbers, I should be able to qualify within 2-5 years. Without a mortgage payment, my Social Security would cover reasonable living expenses. My condo is well-suited for me to age in place at a reasonable monthly cost (and at a lower monthly cost than trying to rent an apartment.)

    I am 68 years old. For over ten years I cared for my father (a WWII Veteran) in my home until he passed away in early 2020. I was preparing to start a part-time job in early 2020, when the pandemic started. As a Senior with risk factors, I was unable to find safe work options and am currently carrying far more debt than I was in early 2020.

    I have just started a part-time job as a caregiver (thanks to the Pfizer vaccine offered at the National Guard site in Des Plaines). I do some online sales and hope those sales will also help supplement my income.

    If I am able to work part-time for the next five years, I should be able to pay down my other debt. If I am unable to continue to work, I will have to make adjustments, which I am willing to do.

    Again, my housing costs are safely and securely paid from my Social Security check. I am capable of continuing to pay affordable mortgage costs, while working down my other debt.

    I am seeking an affordable refinancing option, and am open to suggestions and products.

    There have been two comparable 2-bedroom units sold in this building in 2021 ~ one earlier in the year for $144,000 and a recent one for $155,000. My unit may be valued at a bit less as it is pretty original, without upgrades to the kitchen and baths. (My original goal was to roll some of my additional debt into an interest-only home equity loan at 80% of the current appraised value.)

    Your assistance would make a world of difference to me right now, and all the difference in the world to me in my retirement years. Please help me stay in my home.

    Regards,

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