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HUD HOC Reference GuideAdjustable Rate Mortgages and Interest BuydownsChapter 2Mortgage and Credit Guidelines Page 2-13 Adjustable Rate Mortgages (ARMs): Borrowers who are utilizing the 1-year ARM with a loan-to-value (LTV) of 95% or higher, must qualify at the initial rate plus 1%, i.e., the anticipated maximum second year rate. FHA Hybrid ARMs are underwritten at the initial interest rate. Please see: Handbook 4155.1, Section 6.B Temporary Interest Rate Buy Down: Borrowers, sellers, builders or lenders may pay/offer buy downs for fixed rate mortgages for 1-4 unit properties (not permitted for ARMs), however, FHA no longer permits underwriting at the bought down rate; the borrower must qualify at the full note rate. If the buy down is paid by an interested party (seller/builder/lender), those funds must be considered as part of the permitted contribution limit. Please see: HUD Handbook 4155.1, Section 6.A
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![]() | Content Archived: November 5, 2012 | |
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