IS MORTGAGE INSURANCE REQUIRED?

FHA requires a mortgage insurance premium on the 203(b) program. An up-front premium of 2.25% of the loan amount is paid at closing and can be financed into the mortgage amount. In addition, there is a monthly MIP amount included in the PITI of .50%. Condos do not require up front MIP - only monthy MIP.

CAN I USE GIFT FUNDS FOR MY DOWN PAYMENT?

The down payment can be 100% gift funds. This is one of the key benefits to the FHA program.

Verification of the source of gift money is not required. However, it is necessary that the gift funds be deposited in the borrower's bank or savings account, or in an escrow account, prior to underwriting approval. Proof of deposit is required.

Gift donors are restricted primarily to a relative of the borrower. They can also be certain organizations, such as a labor union or charitable organization. Contact your local branch for complete information.

GENERAL RULE OF THUMB ON BANKRUPTCIES?

Generally, a bankruptcy will not necessarily disqualify a potential borrower. Guidelines are as follows:

Chapter 7: Two years must have passed since the bankruptcy was discharged; the borrow must have reestablished good credit without delinquencies for two years (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs.

Chapter 13: A borrower currently paying off debts through this process may qualify if a minimum of one year of the payout period has elapsed and payment performance has been satisfactory with no new derogatory credit and the borrower must receive court approval to enter into the mortgage transaction.