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.
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 and Http://HUD.gov to see what the conforming rates are at this time.
And finally, https://entp.hud.gov/idapp/html/hicostlook.cfm
May the bank be with you....
Please be advised that:
The information and notices contained in this blog are intended to summarize recent developments and news. The posts are presented as general research and information. These posts are not intended, nor should be regarded, as legal advice. Some blog posts concern allegations made in civil lawsuits and in criminal indictments in United States Courts. All persons are presumed innocent until convicted of a crime and proven guilty. Readers who have particular questions or who believe that they need legal counsel should seek the advice of a qualified attorney. It is neither the editor's or author's intention to create a confidential relationship or any broker-client relationship via communication from this site at any time. Please consult with your state real estate board if questions & answers in the education section conflict with the laws of your region or if you need clarification regarding their applicability or how they may govern the services that you provide.
By entering this web site, you understand the following:
When you select a link to an outside Web site, you are subject to the privacy, copyright, security, and information quality policies of that Web site. David Saks:
1.DOES NOT control or guarantee the accuracy, legality, relevance, timeliness, or completeness of information contained on a linked Web site;
2.DOES NOT endorse linked Web sites, the views they express, or the products/services they offer unless linked web sites, the views they express, or the products/services they offer endorse or support David Saks in accordance with the standards of the Tennessee Real Estate Commission and the Federal Government's laws regarding commerce and the application, solicitation and transmission of internet-related concerns, commerce or social networking;
3.CANNOT authorize the use of copyrighted materials contained in linked Web sites;
4.IS NOT responsible for transmissions users receive from linked Web sites;
5. That DavidSaks.Com is biographical & real estate related. Some links within will leave this site.
6. http://activerain.com/profile/davidsaks is internet-compliant & abides by the rules & regulations of the Tennessee Real Estate Commission, Eve Maxwell, Executive Director.
7. Unless indicated otherwise, ActiveRain does offer listings, or IDX and is provided for licensed salespersons, brokers, buyers & sellers of real property as a community & professional service.
8. David Saks is a retired / licensed real estate broker in the State of Tennessee, license #290452, and an independent contractor.
9. Information is believed to be accurate, but not guaranteed, at any realty link or document connected to the World Wide Web & viewable by anyone connected to the internet who has a web browser.
10. Brokers, buyers, sellers, agents & anyone should independently verify any information prior to submitting any offer to purchase goods & services from any link.
11. Please Visit The American Real Estate Alliance or Memphis.8k.Com for additional information regarding property issues for real estate professionals and consumers.
Before you even think about committing a real estate crime
click this red button.
"Information generated by the Department of Justice is in the public domain and may be reproduced, published or otherwise used without the Department’s permission. Citation to the Department of Justice as the source of the information is appreciated, as appropriate."
© All Rights Reserved.
Department of Justice Legal Policies
Click "HERE" For Today's Question
David Saks Show
University of Memphis
Mr.Saks' participation in ActiveRain ended April 13, 2015.
His blog archives will remain online.
May God bless you.