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HUD Loan

by Craig
(Colorado)



My client wants to bid on a HUD home, their is an insured escrow on it. He wants to pay for the escrow out of pocket, not roll it into the loan, which loan on sect 4 of the contract would apply, 203b, 203b escrow, 203k?

Thanks Craig

=====ANSWER=====

Hello Craig;

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Thanks for stopping by my site and asking a question.

If your customer is not putting down at least 20%, then he cannot get around the escrow requirement by FHA. In fact this is the down payment requirements for any lenders to avoid escrow.

The lender will not waive escrow until the LTV is 80% or below. Otherwise they will have to setup escrow for taxes and insurance. That is the only way the lender can protect themselves with an LTV above the 80%.

Most FHA buyers will put down 3.5% so they end up with a 96.5% LTV.

Chances are you are doing an FHA 203b loan.

Hopefully this helps.

Regards,

Jeff Ragan

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