Essentially, the rule is that anyone who is purchasing a primary residence can make use of an FHA 203(b) loan. However, in order to qualify for a 203(b) loan, borrowers must typically meet several other requirements, including having a credit score of at least 500 (though lenders typically prefer 620+), having a DTI ratio of no more than 45%.
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The FHA 203(b) loan insurance program is for people who want a single-family. For these FHA guaranteed loans, lenders offer loan terms at 15 or 30 years. The FHA does not set interest rates for these loans, instead they are negotiated between the borrower and lender.
The basic FHA program, 203(b), provides insurance for residential borrowers purchasing homes with one to four units. To qualify you must live in at least one unit and meet various income and credit.
· Keep in mind the FHA 203B is a loan product that can be used on any home purchase even if it is not owned by HUD. So to answer your question, no it does not have to be a HUD home to use the FHA 203B loan (with a repair escrow).
· The 203(b) FHA fixed rate mortgage loan program is the widely used. In addition to the other types of FHA loan guidelines that pertain to specific types of purchases, there is the FHA Energy. Who Pays for the Appraisal and How Much are they. The FHA.