The Federal Housing Administration (FHA) is a Federal Agency within the United State Department of Housing and Urban Development.  Created in 1934 the FHA loan program gives lenders protection against borrower default in the form a Mortgage Insurance Premium which is paid for by the borrower in a combination of a "financed upfront MIP" (1.00% of the base loan amount) plus a "monthly MIP" paid as part of the borrower's monthly payment (an annual 1.15% of the base loan amount divided by 12 for 30 year loans with LTVs greater than 95% and an annual 1.10% of the base loan amount divided by 12 for 30 year loans with LTVs equal or less than 95%; 0.50% of the base loan amount divided by 12 for 15 year loans with LTVs greater than 90% and 0.25% of the base loan amount divided by 12 with LTVs equal or less than 90%).  FHA does not lend money.  FHA is considered an insurance program.  (Calculator)

• PRESENT CREDIT UNION OFFERED PROGRAMS:  Fifteen (15) year and Thirty (30) year fixed rate, fully amortizing conforming first lien mortgages and FHA 5 Year Fixed Rate ARM. 

  Amortization	30 Years
  Margin	2.25%
  Index	Weekly average yield of U.S. Treasury Securities adjusted to a constant maturity of one year, as shown on Federal Reserve Statistical Release H15 (519).
  Adjustment Caps (after 5 years)	1% up or down / 5% lifetime   CLICK HERE TO VIEW FHA ARM DISCLOSURE (PDF)

• Rate and Term Refinance: The maximum mortgage is the lower of the LTV limitation or the existing debt calculation described below, and may never exceed the geographical statutory limit except by the amount of any new UFMIP (Upfront Mortgage Insurance Premium)

• LTV Ratio Applied to Appraised Value: Multiply the appraised value of the property by 97.75 percent.  Any appraisal requirements, including repairs, must be satisfied before the mortgage is closed.

• Existing Debt:  Add together the amount of the existing first lien, any purchase money second mortgage, any junior lien over 12 months old, closing closing costs, prepaid expenses, borrower paid repairs required by the appraisal and discount points (if any).

If any portion of the funds of an equity line of credit in excess of $1000 was advanced within the past 12 months and was for purposes other than repairs and rehabilitation of the property, the line of credit is not eligible for inclusion in the new mortgage

The amount of the existing first mortgage may include the interest charged by the servicing lender lender when the payoff will not likely   be received on the first day of the month (as is typically assessed on FHA-insured mortgages).  The amount also may include any prepayment penalties assessed on a conventional mortgage.

Prepaid expenses may include the per diem interest to the end of the month on the new loan, hazard insurance premium deposits, monthly mortgage insurance premiums, and any real estate tax deposits needed to establish the escrow account regardless whether the mortgagee refinancing the existing loan is also the servicing lender for that mortgage.

• Additional underwriting and eligibility criteria:

• The mortgage being refinanced must be current for the month due, e.g., a refinance of a mortgage anytime in November must have had the October payment made.

• Subordinate liens, including credit lines, regardless of when taken, may remain outstanding (but subordinate to the FHA-insured mortgage).

• New subordinate liens may be placed behind the FHA-insured mortgage and are subject to no CLTV cap (Combined Loan to Value).

• At closing, the borrower may not receive cash back in excess of $500.

• Cash Out Refinance:  Limited to 85.00% of Appraisal Value (LTV).  Cash out refinances exceeding 85% are no longer allowed by FHA

• Additional underwriting and eligibility criteria:

• The subject property must have been owned by the borrower as his or her principal residence for at least 12 months preceding the date of the loan application.

• If said property is encumbered by a mortgage, the borrower must have made all of his/her mortgage payments within the month due for the previous 12 months, i.e., no payment may have been more than 30 days late and is current for the month due.

• The property that is security for the refinanced mortgage must be a a 1- or 2-unit dwelling.

• Subordinate financing may remain in place, but subordinate to the FHA insured first mortgage regardless of the total indebtedness or combined loan-to-value ratio, provided the homeowner qualifies for making scheduled payments on all liens.

• Any co-borrower or co-signer being added to the note must be an owner and occupant of the property.  Non-occupant owners may not be added in order to meet FHA's credit underwriting guidelines for the mortgage