David Saks

A veteran is applying for a 400,000 dollar loan, which is the purchase price of the home, and has full VA entitlement. The home was appraised at 425,000 dollars.

The required downpayment for the loan is 1.5% of the total loan amount, or $6000 dollars if no downpayment is applied to the cost.

Is this fact true or false ?

Please remember to take your time. The solution is posted  below the wildlife photo.

A. False

One of the key characterisitics of a VA loan is that no downpayment is required as long as the loan does not exceed the appraised value of the home.

Prepayment penalties are always a condition of underwriting a VA loan.

Is this fact true or false ?

Please remember to take your time. The solution is posted below the wildlife photo.

A. False

Prepayment penalties are not allowed with a VA loan.

This is considered one of the key characterisitics of a VA loan.

A veterans entitlement may only be restored after his or her VA loan is assumed and the one who assumes the loan is not a veteran.

Is this fact true or false ?

Please take your time. The solution is posted below the wildlife photo.

A. False

One of the conditions for restoration of entitlement is that the new borrower must be a veteran and agree to substitute his or her entitlement for the original borrower's entitlement.

If the parties meet the specifications for qualification, and loan payments are up to date, and the new borrower is approved, the original borrower will obtain a restoration of entitlement.

A veteran may receive a VA guaranteed loan only on a single family residence.

One to four unit unit residences are ineligible.

Is this fact true or false ?

Please take your time. The solution is posted below the wildlife photo.

A. False

A one to four unit residence is eligible for a VA loan as long as the veteran occupies one of the units.

The the VA will guarantee a loan only if the lender does not require a downpayment.

Is this fact true or false ?

Please take your time. The solution is posted below the wildlife photo.

A. False

Lender's will make a loan without requiring a downpayment because the government has made a guaranty to reduce the risk to the lender if the buyer ultimately defaults on the loan.

Discount points always have to be paid by the borrower on an FHA loan.

Is this fact true or false ?

Remember to take your time. The solution is posted below the wildlife photo.

A. False

Discount points may be paid by either the borrower or the seller.

Other parties are allowed to pay the discount points on the FHA loan for the borrower.

When the FHA considers the application of the local loan ceiling for the making an FHA loan, the decision is based on both the costs of mortgage insurance and the debt-to-income ratio of the borrower.

Is this fact true or false ?

Please remember to take your time. The solution is posted below the wildlife photo.

A. False

The FHA's decision to establish a loan ceiling for the purchase of a property is based upon the median housing costs of the region in which the loan is being applied for.

For hypothetical purposes, a home is located in a low closing cost area of a state and it's selling for $400,000.

It was appraised at $410,000.

The FHA max ceiling for the loan is $390,000.

The maximum amount that the buyer would be able to receive is the FHA max of $390,000.

Is this fact true or false ?

Please take your time. The solution is poted below the wildlife photo.

A. False

The FHA will have a maximum loan amount available based under the FHA's LTV (loan to value) rules.

In a state that is low-closing recognized and the price of the property or it's value is over $125,000 the maximum LTV would be 97.15% of the lessor of the property's appraised value or sales price.

The selling price is lower so we multiply 97.15% times 400k and here's what it looks like :

400000 selling price
*
0.9715 or 97.15% of the selling price
=
388600 max amount available for the loan

$388,600 is less than the amount that the FHA will loan, $390,000, so the buyer will qualify.

The ceiling and FHA percentages may have changed since I wrote this entry, so please remember to check with your lender to see what the conforming rates are at this time.

A buyer wants to finance the purchase of a duplex with an FHA loan.

The buyer may do this only if the intention is to rent out both of the units.

Is this fact true or false ?

Please take your time. Te solution is posted below the wildlife photo.

A. False

Federal Housing Administration (FHA) loans are normally made to finance the purchase of an owner-occupied primary residence.

The Federal Housing Administration not only insures the loans it sells, but it buys them also.

Is this fact true or false ?

Please take your time. The solution is posted below the wildlife photo.

A. False

The Federal Housing Administration neither buys nor sells loans.

The Federal Housing Administration does insure loans, however.