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Investment Purchase

FHA MORTGAGE FOR INVESTMENT PROPERTIES

The FHA mortgage lenders provide federally insured loan for investment Multi Units including Duplex, Tri-plex, Four-plex.

CLICK HERE TO CHECK 1-4 UNIT FHA MORTGAGE LOAN LIMITS IN YOUR STATE!

The FHA investment property mortgage loan requires the buyer to put down a minimum of 3.5% of the purchase price and allows the home seller to credit up to a 6% of the sales price to assist with the sellers closing cost.

FHA MORTGAGE INVESTMENT PURCHASE EXAMPLE- Say For example if you purchase a $250,000 property using an FHA loan with a full seller’s assist you would only need $8,750 to purchase the home. FHA loans are readily available for single family homes, duplexes, triplexes and quads but the loan amount limits vary by county and the limits for each state/county are available here So, how do you determine how much rent your tenants will owe you each month? The easiest way is to do a quick search on a website that shows rental listings. See what landlords are charging for similar properties.Speaking of rental income, can you use the proposed rental income from the property you are buying to help you qualify for the mortgage? Yes, this is possible. If you have landlord experience, your chances of using the future rental income is better. However, some loan types allow you to use the income to qualify even if you have no landlord experience.

FHA MORTGAGE APPLICANTS BECOMING LANDLORDS- Finally, is there a downside to owning investment property? Perhaps you would not like the idea of of collecting rent each month from your friendly neighbor tenants, or sharing walls with neighbors and unclogging toilets, disposals or replacing broken fixtures all odd hours, being a multifamily landlord may not be for you.When you’re a landlord you’re required to keep the property in good shape for your tenants and be there when things need fixing. If this doesn’t sound like fun to you, property management services can perform all your landlord duties for you.

FHA MORTGAGE LENDERS INVESTOR INFO

  • Are there limitations to the number of HUD Homes that an investor can purchase?An Investor Buyer is a buyer who will not occupy the HUD Real Estate Owned (REO) Property as their Principal Residence.   HUD does not limit the number of HUD REO properties an investor can purchase.  However, Investors may.
  • What are the investor ownership requirements for condominium projects?For all existing or non-gut rehabilitation projects, any investor/entity (single or multiple owner entities) may own up to 50 percent of the total units at the time of project approval if at least 50 percent of the total units in the project have..
  • Can an investor bid on a HUD Home?An Investor Buyer is a buyer who will not occupy the HUD Real Estate-owned (REO) Property as their Principal Residence.   Investors may only bid on properties available during the Extended Listing Period. To search.
  • Can a lender process a 203(k) rehabilitation mortgage for an investor?Not at this time. A moratorium on 203(k) investor loans was announced in Mortgagee Letter (ML) 96-59. This moratorium on 203(k) investor loans also applies to the sale of HUD-owned property. ML 96-59 is available.
  • Does FHA allow investor participation in the 203(k) or Limited 203(k) programs?FHA does not allow investor participation in the 203(k) or Limited 203(k) programs.  For more information see Handbook 4000.1 II.A.1.b.iii.(C) & II.A.
  • How can I find out if Fannie Mae or Freddie Mac is the mortgage investor on my loan?To find out if Fannie Mae or Freddie Mac is the investor for your home loan, you can go to the following websites. Additional information and Frequently Asked Questions are also located at these sites. Fannie Mae loan look-up tool.
  • Will FHA allow a Streamline Refinance of an existing FHA loan by an investor?Streamline Refinances may be used for Principal Residences, HUD-approved Secondary Residences, or non-owner occupied properties.  Non-owner occupied properties and HUD-approved Secondary Residences are only eligible for streamline refinancing into a fixed rate mortgage.   For Investment Properties, the maximum Base Loan Amount for Streamline Refinances is:  1.     The lesser of:          o     The outstanding principal balance of the existing mortgage as of the month prior to mortgage Disbursement; or           o     The original principal balance of the existing mortgage (including financed UFMIP); 2.      Less any refund of UFMIP (if financed in original mortgage).      For additional information see Handbook 4000.1:II.A.8.d.vi.(C)(2)(a)(i) and II.A.8.d.vi.(C)(4)(j) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.
  • Can investors assume FHA loans?If the original mortgage was closed prior to December 15, 1989, the assuming borrower may assume the mortgage as a principal residence, HUD-approved secondary residence or investment property.    The maximum loan-to-value (LTV) for an investment property assumption is 75%.  Either the original appraised value or new property value may be used to determine compliance with the 75% LTV limitation.     For additional information see Handbook 4000.1 II.A.8.n.ii; II.A.8.n.iii.(A) available at  http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.
  • Can the 203(k) program be used to purchase a HUD REO property?.    Investor purchases of HUD REO properties are not eligible for 203(k) financing.   For additional information see Handbook 4000.1 II.A
  • Can a person get an FHA insured loan in the name of a business?on the property deed or title.  All parties appearing on the property deed or title must also appear on the security instrument (i.e. mortgage, deed of trust, security deed).    Streamline refinances by investors or for secondary.
  • Will HUD return the earnest money deposit if a HUD Home sales transaction fails to close?Should the sales transaction fail to close as scheduled, HUD may consider the earnest money deposit forfeited or may return all or a portion of the earnest money deposit.   Investor Buyer Subject to state law.
  • What is the ”HOPE Now” Alliance and can it help me avoid foreclosure of my home?HOPE NOW is an alliance between counselors, mortgage companies, investors, and other mortgage market participants. This alliance will maximize outreach efforts to homeowners in distress to help them stay in their homes and will create a unified.
  • How does HUD determine the winning bid for HUD Real Estate Owned (REO) Properties sold during competitive sales periods?in identical net offers, HUD will give preference to the Owner-Occupant Buyer. If the identical bids were submitted by two or more Owner-Occupant Buyers, or by two or more Investor Buyers, HUD will choose the winning bid by lottery.
  • Are there any incentives for second lien holders who participate in the FHA Short Refinance program?.    Existing second lien servicers will be entitled to a one-time incentive of $500 for each successful loan closing.  Existing second mortgage investors will be entitled to an incentive based on the combined loan-to-value (CLTV) of the existing lien. Are termite inspections required on Streamline Refinance transactions?) if law, banking regulations, or its secondary market investors require the lender to obtain these services on a streamline refinance made without an FHA appraisal.    For streamline refinances with an appraisal, repair.
  • What are the general FHA eligibility requirements for condominium projects?) Investor Ownership: Up to 50% on existing project >12 months old, or non-gut rehab conversion. Homeowners Association (HOA) Dues: No more than.
  • What property types are eligible for 203(k) financing?contract or addendum. Investor purchases of HUD REO properties are not eligible for 203(k) financing. For additional information see Handbook 4000.1 II.A.8.a.iii
  • Is approval for a HECM short sale required if less than the debt owed but at the full appraised value? There are two scenarios for HECM short sales. The first involves a sale by the mortgagor or their estate and the other is the sale of an acquired property by the mortgage servicer or investor. In instances where the property is being
  • What are the allowable closing costs for a HECM short sale? loans, regardless whether the mortgagor or the investor does the short sale. When servicers identify closing costs that appear excessive or out of the ordinary, they must obtain documentation to support the cost is a reasonable and customary
  • Can a person have more than one FHA loan? FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance.   Properties previously acquired as Investment Properties are not subject to these restrictions.   Listed below are the only circumstances in which a Borrower with an existing FHA-insured Mortgage for a Principal Residence may obtain an additional FHA-insured Mortgage on a new Principal Residence:   RELOCATION – A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is: – relocating or has relocated for an employment-related reason; and – establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence. If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence provided the relocation meets the two requirements above.   INCREASE IN FAMILY SIZE – A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that: – the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and – the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal.    VACATING A JOINTLY-OWNED PROPERTY – A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.   NON-OCCUPYING CO-BORROWER – A non-occupying co-Borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be their own Principal Residence.   For additional information see Handbook 4000.1 II.A.1.b.iii.(A) at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh
  • Are there subordinate financing restrictions for FHA streamline refinance transactions? On a Streamline Refinance transaction any existing subordinate financing, in place at the time of case number assignment, must be re-subordinated to the Streamline Refinance. New subordinate financing is permitted only where the proceeds of the subordinate financing are used to:       •     Reduce the principal amount of the existing FHA-insured mortgage, or      •     Finance the origination fees, other closing costs, or discount points associated with the refinance.  There is no maximum CLTV.     For additional information see Handbook 4000.1 II.A.8.d.vi.(C)(4)(k) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh
  • Can a borrower with a portfolio of rental properties use FHA financing if they have no other FHA loans? FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance.  For additional information see Handbook 4000.1 II.A.1.b.iii.(A)(2)(b) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh
  • Who are Fannie Mae and Freddie Mac and what do they do? Fannie Mae and Freddie Mac are government-chartered companies with a mission to provide a stable source of funding to the U.S. housing and mortgage markets. The companies purchase and securitize mortgage loans to ensure that money is consistently available to financial institutions that lend money to home buyers. Additional information is available at the following web pages: Freddie Mac http://www.freddiemac.com/ Fannie Mae http://www.fanniemae.com/ Making Home Affordable http://www.MakingHomeAffordable.gov.
  • How does FHA define principal residence?Principal Residence refers to a dwelling where the borrower maintains or will maintain their permanent place of abode and typically spends or will live in the house the majority of the calendar year. A person may have only one principal residence at any one time. At least one borrower must occupy the property within 60 days of signing the security instrument and intend to continue occupancy for at least one year.  A person in military service must meet the requirements of 24 CFR 203.31.  24 CFR 203.31. is available at http://www.ecfr.gov/  For additional information see Handbook 4000.1 II.A.1.b.iii.(A) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.

 

 

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