Effective immediately, will now accept Kentucky HUD REO purchases where the property is eligible for the $100 down payment incentive when obtaining Kentucky FHA 203(b) financing. Properties must be in as-in condition and UNOTU subject to any repair escrow requirements. These incentives are provided by HUD and may be changed or discontinued by HUD at any time. Submissions for use of the $100 down payment incentive must meet the following guidelines:
HUD SALES CONTRACT
- The $100 down payment incentive is only available if it is on the executed sales contract or cover letter from HUD accompanying the HUD sales contract.
- When using the $100 dollar down incentive the LTV will exceed the maximum 96.5%. The AUS will return an “ineligible” findings when ran through DU. Review the findings to ensure that the loan is only ineligible due to exceeding the max allowed LTV. Borrowers using this program may finance the cost of the Up Front MIP through their Kentucky FHA insured loan provided the total mortgage amount (base loan amount + Up Front MIP = Total loan amount) does not exceed 100% of the “as-is” appraised value. Approved borrowers are not eligible to finance prepaid expenses and/or financing/closing cost through their Kentucky FHA insured mortgage. (See HUHUD Mortgagee Letter 2011-19UH)
- UExample scenario when sales price equals value:
Sales Price: $100,000
Maximum total mortgage: $100,000
Maximum base mortgage: $99,010 ($100,000 value / 1.01 …..Assuming 1% UFMIP)
UFMIP: $990.10 (only $990 of this gets financed since total loan is rounded down to nearest dollar)
Total loan amount: $100,000 ($99,010 base PLUS $990 whole dollar portion of UFMIP).
Required down payment: $990 (Sales price minus base loan amount).
Required cash to close: $ (down payment plus closing costs and prepaids [other than UFMIP] not paid by seller)
Example when Value exceeds sales price:
Sales price: $95,000
Maximum FHA loan amount can receive is calculated as follows:
($95,000 – $100 down payment= $94,900 + 1% UFMIP of $949 = $95,849. The upfront MIP is allowed in this example since the total loan amount will not exceed 100% of the appraised value.
MINIMUM CASH INVESTMENT
- All loans require borrowers to make a $100 down payment. The standard FHA policy requiring that borrowers make a 3.5% investment is not required for the FHA $100 down payment incentive. Borrowers may not receive any cash back at closing. The seller (HUD) contributions stated on the HUD REO sales contract, if any, can only be used toward closing costs and prepaid expenses.
- Owner occupied only. Non- occupying co-borrowers not permitted.
- All loans utilizing the $100 down incentive will be underwritten according to standard FHA and Platinum Mortgage, Inc guidelines. Loans must be run through Total Scorecard using DU. Total Scorecard should return an “ineligible” for mortgage amount calculation when using this program. Please review the DU findings to ensure that the loan is only ineligible due to the max mortgage amount and/or LTV.
CALCULATING MAXIMUM MORTGAGE AMOUNT FOR $100 DOWN INCENTIVE
- To calculate the FHA maximum mortgage amount using the $100 down incentive, take the lesser of the sales price or appraised value minus the $100 down payment. This will be the new base loan amount. Calculate the Up Front MIP accordingly to determine total loan amount which cannot exceed 100% of the appraised value.
- Louisville Ky FHA Loans (louisvillekymortgage.net)
- Louisville Kentucky FHA Streamline Requirements (louisvillemortgageguide.com)
- KHC’s First Mortgage Government Loan Products (louisvillekentuckymortgagerates.com)
- FHA Loans in louisville, kentucky (louisvillemortgageguide.com)
- Frequently Asked Questions about FHA Kentucky Home Loans (louisvillekymortgage.net)
- What To Look For In A Property When Financing With FHA? (azfhalender.com)
- >FHA to increase the FHA monthly mortgage insurance (Kentucky) (louisvillekentuckymortgagerates.com)
- Down Payment Assistance Program (DAP) Guidelines Kentucky Housing Corporation (louisvillekymortgage.net)