FHA

Question 1

Max LTV: FHA purchase @ > 580

Answer 1

96.5%

Question 2

Max LTV: FHA rate & term refi

Answer 2

97.75%

Question 3

Max LTV: FHA purchase @ < 580

Answer 3

90%

Question 4

Max LTV: FHA cash out refi

Answer 4

85%

Question 5

Min down: FHA purchase @ 570

Answer 5

10%

Question 6

Min down: FHA purchase @ 600

Answer 6

3.5%

Question 7

Minimum score for 3.5% down on FHA purchase?

Answer 7

580

Question 8

Conditions for a HUD approved second home? (You can get a second FHA mortgage if these conditions are met)

Answer 8

• At least 100 miles away from first home
• Necessary for employment, and
• Insufficient rental property near place of employment

Or

• Rendered necessary by increase in # of dependents

Question 9

FHA UFMIP:

Answer 9

1.75%

Question 10

FHA MIP with LTV=96.5%

Answer 10

0.85%

Question 11

FHA MIP with LTV = 94%

Answer 11

0.8%

Question 12

Max Seller concession: FHA

Answer 12

6%

Question 13

What is the late fee for an FHA or a VA loan?

Answer 13

4% of monthly P&I

Question 14

Max ratios: FHA @ 560 credit score

Answer 14

31/43 - no DTI cap extensions w/ compensating factors allowed with credit score below 580

Question 15

Max ratios: FHA @ 580 and above with no discretionary debt

Answer 15

40/40

Question 16

Max ratios: FHA @ over 580 with no compensating factors

Answer 16

31/43

Question 17

Max ratios: FHA @ above 580 with verified and documented cash reserves

Answer 17

37/47

Question 18

Max ratios: FHA @ above 580 with documented and verified cash reserves AND residual income

Answer 18

40/50

Question 19

Practical min credit score: FHA

Answer 19

500

Question 20

A Lead-Based Paint disclosure is require for homes built before ____

Answer 20

1978

Question 21

An appraisal is valid for __ days, with an optional __ days extension if the mortgagee approved the borrower while the appraisal was still valid.

Answer 21

120

30

Question 22

When can a judgement be considered resolved?

Answer 22

When the borrower has entered into a valid agreement with the creditor to make regular payments on the debt, and has made timely payments for at least 3 months. The obligation must not supersede the FHA-insured lien. The mortgagee must include the payment in the DTI, and obtain a copy of the agreement and proof that payments were made on time.

Question 23

A borrower with a chapter 7 bankruptcy can obtain an FHA-insured mortgage if _ years have elapsed since the date of bankruptcy discharge.

Answer 23

2 years, but 12 months is acceptable if the bankruptcy was caused by circumstances beyond the control of the borrower.

Question 24

A borrower can obtain an FHA-insured mortgage if _ years have elapsed since his/her foreclosure or deed-in-lieu of foreclosure.

Answer 24

3 years after case number assignment

Question 25

FHA: for a student loan in deferment, how do you calculate the payment to include in DTI calculations?

Answer 25

0.5% of the outstanding balance. Balance x 0.005

Question 26

FHA identity of interest transactions have an LTV limit of:

Answer 26

85%

Question 27

A property is not eligible for an FHA-insured mortgage if it's being resold fewer than __ days after acquisition.

Answer 27

90

Question 28

A mortgagee must obtain a second appraisal by another appraiser if:

Answer 28

* The resale date of a property is between 91 and 180 days after acquisition, and * The resale price is at least 100% greater than the price paid to acquire the property The cost of this second appraisal cannot be paid by the borrower.

Question 29

Restrictions on LTVs are based on the loan amount before or after addition of the UFMIP?

Answer 29

Before

Question 30

FHA: max LTV on a non-occupying co-borrower transaction. When can this limit be exceeded?

Answer 30

75% It can be exceeded to 96.5% if the borrowers are family members, provided the transaction does not involve: * a family member selling to a family member who will be a non-occupying co-borrower, or * a transaction on a two to four-unit property

Question 31

FHA: for accounts (excluding student loans and contingent liabilities) where no documented payment is available, how should the mortgagee calculate the monthly payment?

Answer 31

5% of the outstanding balance of the loan

Question 32

FHA: when can the mortgagee include bonus income? How do you calculate it?

Answer 32

If they've received it for two years, and it's likely to continue. One year is sufficient if the mortgagee documents that it's been earned consistently and is likely to continue. Average the last two years, or 12 months, as applicable. If bonus income has decreased by more than 20% in the last year, you must use that year's income.

Question 33

FHA: for seasonal employees with unemployment income, the mortgagee must document:

Answer 33

That the unemployment income has been received for at least two full years and that it is likely to continue.

Question 34

A cash-out refinance must be downgraded to a refer and manually underwritten if any mortgage trade line reflects ___

Answer 34

Any delinquency in the 12 months prior to case number assignment.

Question 35

FHA: required documentation for self-employed borrower's business debt

Answer 35

Documentation that the debt is paid out of company funds (bank statement? Letter from accountant?) and that the debt was considered in the business' cash flow analysis (tax returns)

Question 36

FHA: effective income must be reasonably likely to continue for ___ in order to be included in analysis

Answer 36

3 years

Question 37

FHA Primary Employment: How do you calculate income for salaried workers? Employees who are paid hourly and whose hours are consistent? Employees who are paid hourly and whose hours vary?

Answer 37

* Use their salary * Use rate x hours * Average income over previous 2 years, but if mortgagee can demonstrate an increase in wages, it can use the average of the most recent 12 months

Question 38

A liability doesn't need to be counted if there are fewer than __ payments left.

Answer 38

10 payments

Question 39

How often do FHA loans accrue interest?

Answer 39

Monthly

Question 40

An identity of interest transaction is a sale between _____.

Answer 40

Family members and parties with an existing business relationship.

Question 41

The 85% Identity of Interest LTV limit may be exceeded under the following circumstances:

Answer 41

If the borrower purchases as his principal residence: - The principal residence of another family member - A property owned by a family member in which the borrower has been a tenant for at least six months immediately predating the sales contract. A lease or other written evidence of occupancy is required.

Question 42

FHA: How do you calculate rental income?

Answer 42

75% of the lesser of: - the fair market rent reported by the appraiser - the rent reflected in the lease or rental agreement

Question 43

FHA: How do you adjust non-taxable income?

Answer 43

Add 15%

Question 44

When does the MIP drop on a loan with LTV less than or equal to 90%? With LTV > 90%?

Answer 44

After 11 years | Never

Question 45

FHA: if borrower has collections with a total balance of > $2000, can the loan proceed?

Answer 45

Yes, but 5% of the total balance must be included as a liability in DTI calculations. No documentation is required.

Question 46

FHA: borrower must have received commission for _________ in order to include it in income.

Answer 46

One year consistently, likely to continue - document w/ VOE, paystubs; average over # of months received.

Question 47

Can you do an FHA loan on a property with a cistern?

Answer 47

Yes, but it must be appropriate for the market, be more than a quarter of a mile away from any sources of contamination, and meet local or state health requirements. You may need a waiver from the nearest HUD Homeownership Center.

Question 48

FHA: self-employment income can be considered effective income when:

Answer 48

The Mortgagee may consider Self-Employment Income if the Borrower has been self-employed for at least two years. If the Borrower has been self-employed between one and two years, the Mortgagee may only consider the income as Effective Income if the Borrower was previously employed in the same line of work in which the Borrower is self- employed or in a related occupation for at least two years. (2) Stability of Self-Employment Income Income obtained from businesses with annual earnings that are stable or increasing is acceptable. If the income from businesses shows a greater than 20 percent decline in Effective Income over the analysis period, the Mortgagee must downgrade and manually underwrite.

Question 49

FHA (manual): "acceptible credit history"

Answer 49

No lates on rent or installment debt in previous 12 months, and no more than two 30-day lates in the previous 24 months. No more than one 90-day/three 60-day lates on revolving accounts in the last 12 months. Mitigating circumstances can be taken into consideration if they can be documented.

Question 50

FHA MIP cancellation rules:

Answer 50

The MIP is cancelled after 11 years on loans w/ a down payment > or = 10% , regardless of the term of the mortgage.