fha 203k rehab loan

Asked by Matthew Clemens, 46375 Tue Mar 24, 2009

what downpayment (%) is required?
what is minimum credit score to qualify?
what up front cash is needed?

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Monir Mamoun’s answer
Monir Mamoun, Agent, Denville, NJ
Sat Oct 9, 2010
Hi Matthew, more FHA guidelines released -- fresh data. If you can still use the information, I got two relevant things for you to read -- this is a blog excerpt from Bill Zielinski...

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The FHA is introducing new guidelines on loan to value ratios and the minimum credit score required for FHA borrowers. As detailed in a Mortgagee Letter from the Department of Housing and Urban Development (HUD), the following credit requirements will apply for FHA borrowers, effective October 4, 2010.

* To be eligible for maximum financing, borrowers will need a minimum credit score of 580 or higher.
* Borrowers with a credit score between 500 and 579 will be limited to a loan to value of 90%. A sub 580 FICO credit score borrower will henceforth need to make a 10% minimum down payment on a purchase transaction.
* All borrowers with a credit score below 500 will not be eligible for FHA-insured mortgage financing.

HUD’s newly introduced minimum credit score and loan to value requirements will apply to all single family loan programs, except for Reverse Mortgages (Home Equity Conversion Mortgages) and Hope for Homeowners.

The new credit requirements are not expected to dramatically change the number of FHA mortgage approvals. Most lenders had already imposed a minimum credit score requirement of 640 or higher for FHA borrowers. In limited cases, borrowers with scores between 620 and 639 could still obtain mortgage approval.

Many potential FHA borrowers with scores below 640 who cannot obtain mortgage approval may be left wondering why this is the case if the FHA has established a minimum score of only 580. The explanation for this is that the FHA does not make mortgage loans but rather insures FHA loans made by lenders. Despite the FHA insurance, banks do not have an iron clad protection from loss.

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... rest of that blog at http://seekingalpha.com/article/223956-the-fha-s-new-minimum…


And I wrote a 10 part blog called "Top 10 Credit Myths" which is good..

http://www.trulia.com/blog/monirmamoun/2010/10/top_10_credit_myths
0 votes
Gina, , Crown Point, IN
Tue Mar 24, 2009
Matthew,

R.W. is correct with the down payment being 3.5% just like an FHA. The minimum credit score with some lenders could start at 620 other lenders start at 640. Buyers have to have 3.5% of their own money in the loan process this could be a gift. Sellers can give concession to the buyer for closing costs and pre-paids, but again buyer must have 3.5% of its own money in the transaction. Keep in mind that FHA guidelines have changed within the last year and could change again and it is helpful to meet with a lender so they can update and educate you as they change. Also, it all depends on the property. This is why working with a team of professionals will help you. Every property, owner, buyer and transaction is different.
Web Reference:  http://www.GinaBombin.com
0 votes
R.W. Ahlstrom, , Novato, CA
Tue Mar 24, 2009
3.5%
620
you have to pay the HUD inspector to come out an assess what work needs to be done ($400). Their should be no out of pocket expeses to fix the property. They should all be wrapped into the loan
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