Published on Monday, 31 May 2010 17:03
FHA 203b Mortgage Loan
The section 203b mortgage loan provides FHA insurance to help lenders protect against the risk of default on mortgages to qualified borrowers and is often homebuyers best chance at getting a loan.
Insured mortgages may be used to finance the purchase of new, existing or construction of a 1-4 family owner occupied dwelling, as well as to refinance with or without cash-out (cash-out is limited to an LTV of 85 percent).
Section 203b loan features:
Down payment requirements for the FHA section 203b loan can be as low as 3.5 %. This is because FHA mortgage insurance allows borrowers to finance 96.5% of the value of their home purchase through their mortgage.
Many closing costs can be financed into your FHA mortgage loan. With most conventional mortgages, the borrower must pay, at the time of closing, costs equivalent to 2-3 percent (or more) of the price of the mortgage loan.
By allowing the borrower to finance many of these charges, the borrowers upfront costs are reduced significantly when buying a home.
FHA rules put limits on some of the fees charged by your lenders. For example, the mortgage origination fee charged by the lender may not exceed 1 percent of the amount of the mortgage and the tax service fee is not allowed.
Maximum mortgage loan amount for the 203b mortgage loan by county