The FHA 203(b) Loan Program - STM Partners

Cash-Out Refinances, Continued
Occupancy • Cash-out refinances are eligible only for primary residences.
• Primary residences owned free and clear must be refinanced as cash-out
transactions.
• Owner-occupied One-to-four (1-4) unit dwellings are eligible.
Maximum
LTV/TLTV
• If the borrower has owned and occupied the subject property as their primary
residence for less than one (1) year prior to loan application, the maximum loan
is limited to a combined TLTV of 85% of the lesser of:
• appraised value (no closing costs, discount points or prepaid items), or
• the original sales price of property (no closing costs, discount points or
prepaid items).
Note: A sales price need not be considered if the property was acquired as the
result of inheritance and is, or will become, the borrower’s primary residence.
• A combined TLTV of 85% of the appraised value may be used if the borrower
has owned and occupied the subject property as their primary residence for at
least one (1) year prior to loan application.
Reference: See the TLTV Calculation subtopic in the Secondary Financing topic
subsequently presented in this product description for additional information
when secondary financing exists.
Continued on next page
Section 2.22 July 27, 2012
FHA 203(b) Loan Program Page 48 of 217
Correspondent Seller Guide