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FHA 203(b) Loan Program

What is HUD 203(b) Mortgage Loan?

FHA 203(b) Loan Program

HUD 203(b) mortgage loan is a HUD insured real estate loan secured by a single family principal residence that is originated by a mortgage lender. The HUD insurance protects the lender against default from the borrower.

HUD 203(b) Mortgage Loan is also referred by HUD as Basic Home Mortgage Loan 203(b).

Source :www.MortgagesAnalyzed.com

Eligibility Requirements

The key eligibility requirements are:

  1. The borrower must meet standard FHA credit qualifications.
  2. The borrower is eligible for approximately 96.5% financing. The loan amount may include the upfront mortgage insurance premium.
  3. Eligible properties are one-to-four unit structures.
  4. The loan must be secured by a principal residence.
  5. The maximum loan amount must not exceed the FHA mortgage limits.
Source :www.MortgagesAnalyzed.com

Benefits to the Borrower

203(b) insured loans offers the following benefits to the borrower.

  1. High LTV: The loan product requires a low down payment and allows the borrower to obtain loans up to 96.5% LTV. Due to the high LTV, the borrower does not need to obtain a second mortgage.
  2. Limited Fees: The origination fees are limited and generally capped.
  3. Flexible Qualifying Guidelines: FHA loans have flexible qualifying guidelines which help the borrower.
Source :www.MortgagesAnalyzed.com

Benefits to the Lender

The lender may consider offering these loans due to the advantages listed below.

  1. Untapped Market: The loan can be offered to a segment of borrowers that would not qualify for conventional loans.
  2. Insured Loan: The loan is insured by HUD which limits the default risk.

External Links

  1. HUD 203(b) Mortgage Loan

Updated: Mar 15, 2015

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HUD 203(b) Mortgage Loan offers high LTV and limited fees
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