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.
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
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 Brokersare 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
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 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
