We have had so many inquiries about FHA takeouts that I thought I could address them in our blog. While we are not changing our guidelines to reflect this, we have done some construction loans with the 3.5% FHA down payment guideline, and below is a scenario when we would consider it:
1. They put 3.5% down, but have an additional 16.5% subordinated between land and builders profit.
2. They don’t have a current house to sell.
3. They are better than average borrowers (this is a call the underwriter makes after looking at the complete file)
Approving a file with an FHA takeout and a 3.5% cash downpayment is still an exception, I repeat–is still an exception. But we are seeing more of them, and we have approved some, so I want to give this to you brokers as an option. Let us know if you have a scenario to run.
