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Posts: 6,662
Registered: ‎03-06-2010
Re: just need "clarification"

ledzep75 wrote:

I plan to apply for FHA 15 yr. fixed in Febuary. Purchase price is $85000 . With the required 3.5% down that would leave the "balance" financed  arround $82000.  When looking at FHA's required front end and back end ratios % ( .31  and .43), do lenders use the initial purchase price ($85,000) or the amount after the 3.5 is applied ($82,000) ?Thanks

The lender will not use $82k.  It is your purchase price less your down payment amount plus the UFMIP (upfront mortgage insurance premium) then that figure is the one that the amortization is calculated upon.


As to the ratios: it is not 31% and 43%.  each lender is different, but I see back end ratio's as high as 55% regularly. Check with your lender to find out what ratios they use and what maximum ratios they will consider.