Buying Real Estate

FHA Mortgages - Page 2

Page 2 of 2

FHA Appraisals: FHA uses the same appraisals for all programs. The appraisals (or Conditional Commitments) are done by FHA assigned/approved appraisers and set forth FHA's estimate of value. If the appraisal is at a value lower than requested, a reconsideration of value may be requested by sending FHA recent comparables indicating a higher value, or the buyer may pay the additional difference.

Cosigners: FHA allows a borrower to use a non-occupying cosigner for purposes of qualifying for the loan. The co-signer's income, assets, liabilities and credit history are included in the determination of credit worthiness. The co-signer must be a blood relative, or for unrelated individual, documented evidence of a family-type, long-standing and substantial relationship not arising out of the loan transaction.

Buyer's Costs

  • Down Payment
  • Loan Origination Fee (1% of base loan amount)
  • Escrow Fee
  • Appraisal Fee
  • Credit Report Fee
  • Recording Fees
  • ALTA. Lenders Title Insurance Policy
  • Property Tax Proration and Reserves
  • MMI Impounds (2 months)
  • MIP (can be 100% financed and added to base loan)
  • Hazard Insurance and Reserves
  • Per Diem interest on new loan, based on closing date

Seller's Costs

  • Escrow Fees
  • Sub-Escrow Fee*
  • Tax Service Fee*
  • Revenue Tax Stamps ($1.10 per $1000 sale price, if applicable)
  • Standard Owner's Title Insurance Policy
  • Proration of Property Taxes
  • Payment of assessments, etc.
  • Structural Pest Control Inspection and Repairs
  • Pay Off Existing Trust Deed and Liens
  • Broker fees
  • Association Transfer Fees*
  • Buyers' Loan Processing Fee*
  • Buyers' Loan Document Fee*
  • And Don't Forget...

Down payment, closing costs and impounds required for closing must be paid from the buyer's own funds or can be a non-repayable gift from a relative. FHA does not allow the buyer to pay certain costs and therefore those costs must be paid by the seller (see items under Seller Costs above). If any other costs, other than those FHA non-allowable costs, are paid by the seller on behalf of the buyer, FHA requires that the buyer's loan be reduced by a corresponding amount, saving the buyer very little money, because their down payment is increased.


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