As an incentive to purchase HUD homes, the Federal Housing Administration – otherwise known as FHA – has created several unique financing programs for HUD buyers. These loans offer attractive rates and features, but FHA financing for HUD listings is only available if the home is going to be owner occupied. Metro Home Mortgage is able to help you with the prequalification and closing of these loans.
Here are the different types of special financing you can receive when purchasing a HUD home as your primary residence:
$100 Down Program – You can purchase a HUD Home with only $100 down! While the buyer is still responsible for the earnest money and must submit to typical FHA lending guidelines, this is a great program for first-time home buyers looking to purchase a home.
Good Neighbor Next Door (GNND) – Designed to enhance urban communities, this type of financing offers discounts to firefighters, EMT’s, police and teachers. They receive 50% off the property list price and require only a $100 down payment. There are some minimum guidelines, though. The property must be located in a designated revitalization area, and the buyer must live and work in the same county as the home. Also, the buyer must live in the home for at least 36 months.
203(B) Repair Financing – If the HUD home you are looking at needs under $5,000 of repair work, you can finance the cost by using the 203B loan. This is available on 1-4 unit single family real estate, manufactured housing and condos.
203(K) Streamlined Financing – Allowing for up to $35,000 in repairs, this loan was developed to address properties in need of smaller repairs. This includes repair, replacement and upgrad as well minor remodeling and even painting. You can also finance appliances (not to exceed $2,000) with this loan.
Energy Efficiency Mortgage (EEM) – Aimed at increasing energy efficiency, this loan allows buyers to finance 100% of a cost effective “energy package”. The cost of the improvements, including maintenance, is less than the present value of the energy saved over the useful life of those improvements. Plus, an EEM may be used with 203(B) and 203(K) loans.
For more information on these and more loan programs, contact a Home Mortgage Consultant at 404.847.2525 or go to www.metrohomemtg.com.
All of these ratings relate to a property’s eligibility for FHA financing only. These ratings do not impact a borrower’s ability to use conventional financing or to pay cash.
IN - Insured: Properties listed as "INSURED" meet all FHA requirements for “Minimum Property Standards” (MPS) and are eligible for FHA financing. These properties are eligible for insurance under Section 203(b) of the National Housing Act. An interest rate will be charged on the loan and is negotiable between the purchaser and lender. The mortgage may include some mortgage insurance payments. The originating lender is responsible for making final determination whether a property meets Minimum Property Standards and, consequently, is eligible for FHA insurance.
IE - Insured with Escrow Repairs: Properties listed as "Insurable with Repair Escrow" require repairs of $5,000 or less in order to meet FHA “Minimum Property Standards”. These properties are eligible for an FHA 203(b) insured loan. The costs of the required repairs are included in the loan amount and repaid by the borrower as part of the monthly payment. The repair amount is held in an escrow account by the lender.
Repairs must be completed within 90 days of closing and are monitored by the lender. The lender will inspect work as it is completed on the house and distribute the repair monies as appropriate. Any funds in the escrow account not used for the repairs will be applied to reduce the unpaid principal balance of the loan.
UI - Uninsured: Properties listed as "UNINSURED" do not meet FHA “Minimum Property Standards” and require repairs that exceed $5,000 making them ineligible for an FHA 203 (b) loan. These properties may be eligible for a FHA 203(k) loan which includes the cost of repairs up to $35,000. The repair amount is held in an escrow account by the lender.
Repairs must be completed within 6 months of closing and are monitored by the lender. The lender will inspect work as it is completed on the house and distribute the repair monies as appropriate. There is a provision that allows for escrowing up to 6 months of payments if the house cannot be occupied while repairs are made. Any funds in the escrow account not used for the repairs will be applied to reduce the unpaid principal balance of the loan.
Contact one of our Home Mortgage Consultants at 404.847.2525