Will HUD Allow FHA Loans With No Money Down?
Has HUD changed its mind?
On Monday, May 11th, HUD posted Mortgagee Letter 2009-15 which explained that “Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.”
Immediately the letter was removed from the site. However, we have a copy of HUD Mortgagee Letter 2009-15.
It is not clear if HUD has changed its policy or if the letter will be back. As of early May 18th, the letter has not been re-posted on the HUD Mortgagee Letter site.
If the policy is to allow state and non-profit groups to use the $8,000 first-time buyer credit created by the Obama Administration as a downpayment, then such purchasers would be able in many cases to buy a home with nothing down or close to it.
For instance, FHA requires 3.5 percent down. If a home is purchased for $225,000 the downpayment would be $7,875. Closing costs would be extra, but in today’s market it might be possible to get a seller to pay some or all of the closing costs because the FHA allows a 6-percent “seller contribution” from owners. Please speak with lenders and real estate brokers for specifics.
Stay tuned — we’ll follow up as more information becomes available.
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