The FHA 203(b) Loan Program - STM Partners

No Cash-Out with an Appraisal (Rate and Term Refinances)
General • The existing mortgage being refinanced can be either a current FHA,
conventional, or VA loan.
• Requires an appraisal, full processing documentation and underwriting.
Occupancy Owner-occupied only.
The Maximum
Insurable
Mortgage
Maximum Cash
Back to the
Borrower
• The maximum insurable mortgage is based on the lesser of one (1) of the
following two (2) calculations:
• multiply the appraised value of the property by 97.75%, or
Note: If the property was acquired less than one year before the loan
application and is not already FHA-insured, the lesser of the current
appraised value or original sales price of the property must be used.
• the sum of the existing first lien, Pro Rata MIP (if paying off an FHA
mortgage, up to two [2] months) closing costs, prepaid expenses, borrower
paid discount points, purchase money seconds, junior liens (not used to
acquire the property) over 12 months old (i.e. 12 permanent mortgage
payments made), prepayment penalties, accrued late charges, escrow
shortages, borrower paid repairs required by the appraisal minus any refund
of UFMIP (prepaid expenses are limited to per diem interest and
hazard/flood insurance, property taxes and mortgage insurance impound,
regardless of whether the lender refinancing the existing loan is also the
servicing lender for that mortgage), and
• the base loan amount may not exceed the maximum county loan limits for
the property.
Note: Any appraisal requirements, including, repairs, must be complied
with before the mortgage is eligible for insurance endorsement.
Reference: See the FHA Refinance Loan Amount Worksheet (COR 0333a)
for assistance in calculating the loan amount.
• The borrower may not receive cash back in excess of $500 at closing.
• Delinquent interest may not be included. The refinance does not permit a
borrower to obtain cash back by not making a mortgage payment when due.
Reference: See the Lender Credit subtopic in the Contributions by Interested Parties
topic for additional information.
Continued on next page
Section 2.22 July 27, 2012
FHA 203(b) Loan Program Page 50 of 217
Correspondent Seller Guide