Maximizing Low-cost Program Benefits

Maximizing low-cost mortgage program benefits is yet another way to describe the HUD Section 203k program. With all that has happened in the mortgage and real estate market over the last three years, most devastating of which is the significant loss of equity in homes and personal assets, it seems to me that each person, if made aware of benefits included in certain government-insured mortgage programs, would be inclined to participate in those programs if there was some assurance that the process would not be overly cumbersome.

The following paragraphs will cover a few of those government-insured programs, the benefits included, as well as the process through which a borrower can participate with little or no inconvenience. Improved processing systems and streamlined guidelines put in place to accommodate a better application-to-closing experience for the borrower provide a more pleasant borrowing experience.

The following mortgage programs are currently available through HUD-approved lenders:

  • FHA-Insured 203(b) Mortgage Loan
  • FHA-Insured 203(k) Mortgage Loan
  • HUD “Streamlinked(K)” Limited Repair program
  • Energy Efficient Mortgage(EEM)
  • FHA-Insured Home Equity Conversion Mortgage

FHA-Insured 203(b) mortgage is the traditional low down payment, fixed rate, fixed term financing program that so many home buyers have utilized to purchase their homes over the last seventy five years. The program requires that a home buyer will make a minimum down payment of 3.5% of the purchase price (increased from 3% in 2009), is able to document enough income to repay the loan (41% of gross monthly income to cover combined monthly debt), and demonstrates a responsible debt repayment history (based on credit scoring, a qualify score must be 640 or higher).

This version of FHA financing sets the standard against which other affordable mortgage programs are measured.

The Section 203(k) mortgage, also insured by the FHA consists of the same basic features and is processed according to the same basic guidelines as the traditional FHA mortgage program, except that 203(k) adds a few features in the area of needed repairs/rehabilitation which may have to be completed on the property being financed. For this reason many first time home buyers have derived benefit from a the 203k program in a few ways.

First, there was little or no repair work to be completed upon taking occupancy; Second, the completed repairs created immediate equity; Third, the repayments for completed repair costs were more affordable because of the inclusion in the purchase loan and payments stretched over a 30 year period. For more on 203k visit HUD’s website.

HUD “Streamlined(K)” program is a mini version of the original 203(K) mentioned above.

The repair costs are limited to $35,000 whereas the standard 203k is limited only by the FHA mortgage limits in effect at the time, but there is a minimum repair cost requirement of $5,000 in order to qualify under the “standard K”, whereas there is no minimum for the “limited k”.

Home equity conversion mortgage (HECM reverse) is a program which provides funds for seniors 62 years of age and older, and unlike most other mortgage loan programs, there is no need for verifications of income or assets.

In addition, any credit report done is not a determining factor in the qualification process. In fact, as long as there is enough equity in the home and no liens against that equity, the approval is practically automatic, subject only to normal safeguards and protection of the senior’s interest. Both AARP and NRMLA have been very active in promoting this program.

I recently posted blog article in which I referred to this loan as the only true “No income/No asset” loan remaining after the “Sub-prime Mess”.

We wish to thank you for visiting this blog and hope the information provided is of use to you. We will continue working to provide the most relevant and useful information about current FHA-insured programs and related topics. Thank you and God Bless!


humor or irony?

If the government can’t run business, how come business always runs to the government for a bailout when it runs into trouble? FHA-insured mortgages. Government-run for 75 years!

Many benefits, one monthly payment

One of the objectives that Three-in-One Mortgage has set out to achieve is making people aware of the many benefits that are derived from HUD’s Section 203k rehabilitation mortgage. There are several benefits, but a more important point that should be made is, despite many practical and cost-reduction benefits built into the program, a borrower who finances his/her purchase or refinance with the 203k mortgage will repay the loan in the same manner as with any other affordable, fixed rate, fixed term, 30 year mortgage; One monthly payment with taxes and insurance included. It’s still one payment. Just one.

This mortgage program and my belief that it is the most comprehensive and uniquely suited program available for the affordable financing of a home is the basis for “Three-in-One Mortgage Subscribed” Links (TOM-SL), also referred to as 3-In-1Mortgage. It must be pointed out here that, although Three-in-One Mortgage was my creation, it would not have happened without Google Subscribed Links.

Since June 14 of this year (2009) when I first downloaded an example of Google Subscribed Links (XML coded) format and completed my very first subscribed link, I felt that it would be the most effective method of delivering valuable mortgage information, and so far it has proven to be exactly that. Excellent! is my early assessment of Google Subscribed Links.

I had information to share and wanted an effective way in which to share it. My previous efforts at blog posts, published articles and website content were reasonably satisfactory, but I was spending a lot of time (more than I could have afford, due to other obligations) but not sharing as much information, and the methods were not as effective in maximizing the quantity of individuals who received that info; so when I found Google Subscribed Links and followed some very clear and easy-to-understand instructions, it was time to start creating affordable mortgage subscribed links.

There is still a lot of work to do, both in the area of developing more subscribed links as well as improving my efficiency in and knowledge of the various applications which this tool can effectively create. I’m really still in the beginning stages of the “TOM-SL” program, so there is a long way to go; but hopefully, there have already been a number of people who have received affordable mortgage information that is currently being disseminated through the existing subscribed links. Subscribers to the program are never charged a fee to subscribe. It free! That’s another great feature.

A message to followers and supporters of this blog:

Thank you for your support. We will continue working to provide the most relevant and useful information about current FHA-insured programs and related topics. Occasionally, we’ll post content from other sites based entirely on its value to you. Please let us know what you think by leaving remarks/feedback in the comments section. Thanks and God Bless!


humor, anybody?

If the government can’t run business, how come businesses always run to the government for a bailout when it runs into trouble?
FHA-insured mortgages, government run for 75 years. Lest we forget?

203k Construction

The FHA-insured 203k rehabilitation program permits the new construction of homes that have been demolished or will be razed, provided the existing foundation system is unaffected and will still be used. The complete foundation system must remain in place. This feature of the program makes it unlike other traditional mortgages and standard “New Construction” mortgages for the financing of one-to-four family residential properties in many ways.

Most new construction loans start with architectural specs and plans, environmental reports and, most importantly, the creation of a foundation upon which to construct the new home. Professional builders, professional engineers and local zoning inspectors are engaged to insure that the home, when finished will comply with relevant local ordinances thereby making it possible for the issuance of a Certificate of Occupancy.

At this point the purchaser/builder will be issued legal documents declaring him/her the owner of a legally constructed residence. That’s a very brief description of the new construction process which gives you a basic idea of what is involved. Most traditional mortgage financing plans, including the FHA-insured 203b program (sort of a big brother to 203k), provide only permanent financing.

What this means is normally lender will not close the loan and release the mortgage proceeds unless the condition and the value of the property provide adequate security. Therefore when rehabilitation is involved, the lender will insist that all rehab work be completed and improvements finished to meet lender’s required property standards before a long-term mortgage is made; especially when major construction was being done. This is a problem that has caused many a real estate contract to be cancelled (dead deals) for quite a long time.

Under the 203k guidelines and procedures, each situation discussed in the previous two paragraphs is addressed. In fact, the 203k program was designed to address those situations by providing the financing necessary for a newly constructed home on an existing foundation system that is unaffected, as well as a house in need of repair or modernization, with just one mortgage loan, at a long-term (30 year) fixed rate to finance both the acquisition and rehabilitation/new construction of the property.

203k funds are based typically on the projected value of the property with the work completed (the after-rehabilitation value).


Regulations. The provisions of Section 203(k) are located in
Chapter II of Title 24 of the Code of Federal Regulations under
Section 203.50 and Sections 203.440 through 203.495.

If the government can’t run business, how come business always run to the government for a bailout when it runs into trouble?
FHA-insured mortgages, government run for 75 years. Not too shabby, huh?