November 10, 2014
A reader asks, “Do to my losing my job in 2011, I had my second home foreclosed on. I now live in my manufactured home on 2 acres here in Florida which is paid for. Up to my job lost, I have had great credit. I’m looking into buying a new manufactured home because my wife and I have our 2 adopted grandchildren now.”
“An obvious question would be if we would be able to get a FHA home loan; and also, could our land be used as partial down payment?”
FHA loan rules include a discussion on funds needed to close the deal. FHA loan rules in HUD 4155.1 state, “For purchase transactions, the maximum LTV is 96.5% percent (the reciprocal of the 3.5% required investment).” That means the borrower must put 3.5% down as a minimum.
The VA lists acceptable sources of borrower funds for the down payment which include proceeds from the sale of land, however the list does not include a mention of using land itself as a down payment. However, FHA loans for construction loans where the borrower builds on his/her own land do state the following:
“Equity in the land (value or cost, as appropriate, minus the amount owed) may be used for the borrower’s entire cash investment. However, if the borrower receives more than $500 cash at closing, the loan is limited to 85% of the appraised value. Replenishing the borrower’s own cash expended during construction is not considered ‘cash back,’ provided that the borrower can substantiate with cancelled checks and paid receipts all out-of-pocket funds used for construction. ”
That information is found in HUD 4155.1 Chapter Two Section B–borrowers who need more information should discuss their needs with the loan officer and see what is available in that housing market.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for moderation.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: