Changes to FHA Mortgages effective September 14, 2015

Loan Clip ArtThe FHA Mortgage program has some new and important changes that will certainly impact borrowers. Check out some of the major changes:

1. FHA will no longer allow student loans to be deferred. Lenders have to include a 2% payment in the debt-to-income calculation.

2. Only recorded land contracts can be done as a refinance – if they are not recorded, they must be done as a new purchase.

3. Water tests will be required if a house is on a private well.

4. Streamline refinances can ONLY be done without an appraisal.

5. New net tangible benefit for reduction in term.

6. Secured borrowed funds can only be secured by financial assets or other real estate owned – in other words, you can no longer take out a loan against a car, etc.

7. Sourcing donor’s ability to give gift funds is now an FHA requirement.

8. Only borrowers on the loan can be on the purchase contract and those will be the only parties allowed on title.  A non borrowing spouse may be added to title, but only at the title company’s discretion.

9. Appraisal updates to expired appraisals must be done before the appraisal actually expires to extend the expiration date of the appraisal.

10. Non occupant co-borrowers must be US citizens or have a principal residence in the US.

11. Business disclosure relationship statements must be submitted by Sellers, Realtors, Borrowers, Loan Officers, Processors, Underwriters, Appraisers.

12. Flood insurance must be the lesser of the appraiser’s replacement cost (less land value,) the loan amount, or the flood program’s maximum amount allowed.



Percentage of Distressed Sales in Miami and Broward Counties

For my friend John who asked me about how many homes in our marketplace are either short sales or foreclosures.   Our market is different than what’s happening nationwide, however our news is not all bad.   The percentage of distressed sales is still decreasing even here in Broward and Miami-Dade counties..

Nationally, distressed property sales represent 11% of sales



Here in Miami and Broward Counties (this graph represents Single Family Homes only. The figures for condo’s are similar.)

Distressed Miami Dade 2Q 2014




Mattress Money

Mattress Money and other funds used to purchase a home

With vigilant focus on the source of funds for closing mortgage loans, its important to know what’s acceptable.  Here’s what you need to know and what you will need to provide:

Mattress Money

Or any “cash on hand” is not acceptable.   All funds must be “seasoned,” which means your money needs to be in an institutional bank account (bank, credit union, brokerage, etc.)  You will need to provide all pages of up to three months of bank statements for proof that these funds are yours.

Gift Funds

Are okay with a signed “gift letter” (a form your lender should provide) and evidence of the donor’s ability (a statement showing sufficient funds.)  Later, your lender will need copies of the check, deposit slip, and account statement to show the transfer into your account.

Assets Being Sold

Such as a car, boat, collectible, or anything of value you are selling, require proof of ownership (such as registration or title) and evidence of value (blue book value or appraisal.)   After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds into your account.

Other Examples

Include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings.   Be prepared to show the source of funds, evidence of transfer into your account, and any supporting documentation of value, terms, service provided, etc.


If you have time and want to minimize paperwork, consolidate all funds into one account at least two or three months before you anticipate closing on your new house.  Save any and all evidence of the transfer and deposits, and keep activity to a minimum.


Top 4 Derogatory Credit Events and the waiting periods before you can buy a new home

Have you ever wondered how long you might have to wait after Bankruptcy, Foreclosure, or Short Sale before you can purchase your new home?

Check out the chart and see how long a lender will require you to wait before you can borrow again.

Link to the PDF here:

Interestingly, I recently had a client that was able to purchase a new home just two short years after his short sale.    A wonderful confluence of events allowed him to use his VA eligibility to purchase with nearly zero money down.

He was also able to begin the mortgage process several weeks BEFORE the two-year anniversary date of his short-sale closing, so that he was able to close in a matter of days after the anniversary date passed.

Derogatory Credit Chart

Floridians are paying the 9th highest closing costs in the nation

Closing Costs

Check out the interesting article at that describes how Floridians are paying the 9th highest closing costs in the nation.

Besides lender fees and title charges, don’t forget about your pre-paid taxes and your insurance premiums when you’re calculating how much to save for your down-payment.

Here in South Florida, your insurance premiums are going to be a LOT more than the standard 1% that your lender is going to estimate for insurance on your Good Faith Estimate. Single family homes that don’t have hurricane windows and other storm protection can have insurance premiums as high as $5,000 a year.

Low down-payment options for condos very limited in South Florida


It’s a common question during the first interview with buyers who may be seeking a condominium here in South Florida:

“So do you have a 25% – 30% down payment for your purchase?”

It seems to be lost on home sellers during the current frenzy of activity that is fueled by investors and foreign buyers that are flush with cash these days, but the predominant purchasers of condominiums used to be first-time homebuyers that may not have saved up enough cash to put down $30,000, $50,000 or even $100,000 on a new condominium home.

Florida Condo

However, buyers who use FHA financing, however can purchase homes with as little as 3.5% down-payment.

There’s a hitch, though!   You have to find a building that is already FHA, VA or Fannie Mae approved, and here in Fort Lauderdale, there are only a handful!

How does a condo get approved?

It’s a great question, and one we wish more Home Owners Associations would ask about.

It’s not that hard, but does have some cost.    The fees typically run around $2,000 plus the cost of a consultant if you decide to use someone who is versed in the process to guide you through it.

Typically it’s the HOA and the management company that make the decision to get the condominium FHA approved.

FHA will look at a number of factors, and three are of critical importance:

  • the ratio of homeowner’s to investors – no more than 50% of homes can be investment properties.
  • the number of delinquent HOA dues – no more than 15% of homeowners can be delinquent.
  • the amount of money in reserves – typically FHA looks for an HOA to have an amount equal to a year’s worth of assessments in the reserve.
  • mixed uses – your HOA should not have more than 20% of the total space for non-residential uses.

Considering that first time buyers make up the majority of potential condominium purchasers, it makes sense to your association to undertake this effort.

Low down-payment financing is not just for low income resident – in fact it’s far from the reality of what can happen if your property is only attractive to investors!    Investors are typically the kinds of buyer that are looking for the best deal available, and a preponderance of investors buying in your HOA can serve to hold values stagnant or even drive values down!

I’m hoping we all see your condo or HOA on the FHA Approved List one day soon!



Broker Reciprocity

Data last updated:02/19/2018.


The multiple listing information is provided by Realtor Association of Greater Fort Lauderdale and Miami Association of Realtors from a copyrighted compilation of listings. The compilation of listings and each individual are ©2018 Realtor Association of Greater Fort Lauderdale and Miami Association of Realtors. All Rights Reserved.


The information provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. All properties are subject to prior sale or withdrawal. All information provided is deemed reliable but is not guaranteed accurate, and should be independently verified.