Category Archives: Fha 203ks

6 Things First Time-Home Buyers Need To Know

6 Things First-Time Home Buyers Should Know in 2014

Assistance for first time home buyers in Minnesota is readily available. Here is some important first time home buyer advice and information you should know before you make your purchase.

  1. The U.S. Department of Agriculture (USDA) offers a zero down mortgage option for “rural development.” You may be thinking, “But I don’t want to live on a farm!”  but keep in mind that certain areas you wouldn’t think of as “rural” may actually qualify for USDA rural development financing.
  2. Military veterans may use the VA mortgage loan to finance their first home.
  3. The Federal Housing Administration (FHA) has a 203(b) loan which typically has a lower down payment requirement, lower monthly insurance premiums, and lower closing costs than other mortgage loan programs. First time home buyers should look into the FHA loan.
  4. If you’re thinking of buying a foreclosed home, a HomePath Mortgage may be of interest. With a low down payment, no mortgage insurance required, and no appraisal needed, a HomePath mortgage can help you buy a fixer-upper for your first home. Also look into what’s called HomePath Renovation, a loan to help finance the purchase and remodeling of an investment home, lending up to 35% of the as completed value—no more than $35,000.
  5. Got your eye on a home that needs major rehab that will cost more than $35,000? Apply for the full FHA 203k loan, which will help you make necessary structural repairs so you can have a nice first home. A variation on this is the 203k Streamline loan for homes that need minor repairs, up to $35,000.
  6. First time home buyers should talk with a mortgage consultant. They’ll check your credit score and help you see where you’re at financially, and whether or not you’d qualify for a mortgage.

In Minnesota, contact Lake Area Mortgage, a division of Lake Area Bank at 651-209-2900 for help with finding financial assistance, down payment assistance and more. The experienced team at Lake Area Mortgage can answer your first time home buyer questions, and guide you in the right direction to make getting that first home go from dream to reality.

FHA Condo Approval HUD Minneapolis St. Paul

Check all CIC townhomes and condos here to make sure they are FHA HUD Approved.

Other factors not commonly known that will still be detrimental to successful financing with a condo even after we verify at the HUD condo lookup that the property is FHA approved.

  1. Commercial Space: No more than 25% of the property’s total floor area in a project can be used for commercial purposes
  2. Investor Ownership: Generally no more than 10% of the units may be owned by an investor. This also applies to developers/builders who subsequently rent vacant unsold units.
  3. Delinquent HOA Dues: No more than 15% of total units can be more than 30 days late in arrears of their association fee payments.
  4. Pre-Sales: At least 30% of the total units must be sold prior to endorsement of the mortgage in the case of new construction
  5. Owner Occupancy Ratios: At least 50% of the units must be owner occupied or sold to owners who intend to occupy the units. For proposed, under construction projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50% of the number of presold units (the minimum presale requirements of 30% still applies)
  6. FHA Concentration: FHA may not insure more than 50% of a particular condo project. For projects consisting of 3-4 or fewer units FHA will insure 1 unit.

If these challenges are not researched prior to going under contract the lender will be alerted when they go to order a case number and HUD rejects the property address.

Minnesota MN Mortgage Insurance

As of April 18th FHA mortgage insurance is as follows:
  • 15-year loan term less than 10% down % : 0.50% per year
  • 15-year loan term, loan-to-value 10%+ down : 0.25% per year
  • 30-year loan term, loan-to-value less than 5% down : 1.15% per year
  • 30-year loan term, loan-to-value 5%+ down : 1.10% per year

To calculate your monthly mortgage insurance premium, multiply your mortgage loan size by your insurance premium, and divide by 12 months. You also have a 1% upfront mortgage insurance premium to HUD financed into your loan amount.