Since you are reading this you likely already know that gaining FHA knowledge is crucial to your success in FHA Lending. Learn as much as you can about the FHA lending program. To do this, read as much as you can online, review some FHA home study training courses, and even consider taking a live Training course.
One area that would benefit you to get your arms around are the specialized rules involving maximum Loan to Value (LTV) limits on FHA loans. This article gives you some insight into these max LTV rules.
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What are the maximum Loan to Value Limitations on FHA Loans?
On Purchase loans and Rate and Term Refinance, the amount of any insured mortgage cannot exceed 97.75% of the appraised property value excluding costs or 98.75% if the value if ,000 or less. This rule applies to purchase 1-4 units and no cash out refinance.
Maximum LTV on Cash Out Refinance FHA Loans Owned for More than One Year
For cash out refinance loans, the maximum LTV is 95% and such is permitted only if the following requirements are met:
- Borrowers must own and occupy property over the last 12 months
- Borrowers cannot have any 30 days late payments on credit report in last 12 months
- Must be 1-2 units properties
- All co-borrowers must be an occupant of the property
Maximum LTV on Cash Out Refinance FHA Loans Owned for More than One Year
For cash out refinance loans, the maximum LTV is 85% and such maximum LTV is applicable in the following circumstances:
- Property owned or occupied for less than 12 months
- Property need not be 1-2 units (can be 1-4 units)
- Max LTV will be determined by using the lesser of 85% of appraised value or 85% of the original sales price.
Learn More About FHA Lending Online
Maximum LTV on FHA Loans is one of the areas of FHA Lending that you should know as you begin to offer FHA loan products to your customers. To learn more, download this: FHA Lending Basics
FHA Lending Basics to Know As an FHA Lender Or Broker - Maximum Loan to Value Limitations