Re: just need "clarifica
[ Edited ]
11-18-2012 07:08 PM - edited 11-18-2012 07:11 PM
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.
This is all correct, each lenders overlay will vary, If you stay under 45% on the back end you should be safe with any lender, but as stated some will allow higher ratios.
To calculate the UFMIP mutiply the amount of the loan(if you pay just 3.5% down) 79,130 X .015 = 1189.95 so your total loan amount will be 80,316.95. If you can swing a larger down payment to bring the LTV below 80% you can skip on paying the mortgage insurance monthly, which is rather pricey. (about $60 a month if you go with a 30 year note)
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