12/16/2009 – FHA Re-Fi Calculations – 11/19/09

http://www.fhaoutreach.gov/FHAFAQ/ -ques #4

How do I calculate a 203(k) or Streamline K loan to meet the new cash investment and refinance requirements?

Answer
The new cash investment requirements for all FHA case numbers assigned on or after January 1, 2009 also applies to the calculation of the
loan amount for Section 203(k) and Streamlined (k) loans. Until the new 203(k) Maximum Mortgage Worksheet, form HUD-92700 is posted,
please use the following guidance to modify the existing worksheet. As stated in Mortgagee Letter 2008-23, the Loan-to-Value (LTV) for
203(k) loans may exceed 100% of the appraised value. Modifications have been made to the existing worksheet and will be posted upon
completion of the clearance process.

Form HUD-92700 203(k) and Streamlined (k) Maximum Mortgage Worksheet

Mortgage Calculations for Purchase Transactions (Section C)

Line C1 stays the same

Line C2 stays the same
Line C3 stays the same
Line C4:
Mortgage Amount = Sum of C3 +(-) Required Adjustments (Note 4) ($__________)
LTV Factor (96.5%) (Owner-Occupant) or Less Allowable Down Payment/HUD Owned Property ($__________) (Note 5)
Line C5:
Statutory Investment Required (C3 x 3.5%)
Line C6:
Actual Cash Investment Required (C3 + A5 minus C4 ($__________) (This figure must be equal to or greater than C5; if less, an
adjustment must be made to C4 to ensure a 3.5% investment

Mortgage Calculations for Refinance Transactions (Section D)

Line D1 stays the same

Line D2 stays the same
Line D3: D2 ($__________) x LTV Factor (97.75%) (Owner-Occupant)
Line D4: Maximum Mortgage Amount is the Lesser of D1 or D3 (Note 5)
Line D5 stays the same

FHA Mortgagee Letter 2008-23

HUD Policy Determination

Reference

FHA Mortgagee Letter 2008-23, HUD Policy Determination

Referral Location