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Frequently Asked Questions

You can choose either fixed or variable.

Down payment is determined by three factors: age of the youngest borrower, the purchase price of the home, and current interest rate.

The closing costs are similar to a regular FHA mortgage. 2% of the appraised value of the home is paid at closing to satisfy the up-front mortgage insurance premium payment. This premium is financed into the mortgage and not paid out-of-pocket. There are also standard third-party fees like title, appraisal, and recording of the lien. These costs DO NOT get added to the down payment number shown on the Matrix. The only money you will bring to closing is what is shown on the Matrix.

No, you are allowed to be on title to both homes. You can rent your existing home for cash flow or sell it after you move into your new home. The only disqualifying issue would be if your current home has a FHA mortgage balance. This would require you to refinance into a non-FHA mortgage or sell your home before using the LHL Program. If you own other real estate then your income will need to support the PITI (principal, interest, taxes, and insurance) on existing real estate as well as the property taxes, insurance, and/or condo dues on your new LHL property. After all real estate expenses, installment, and revolving debt is subtracted from income, there must be residual income remaining. This is based on the area you live in and if you are single/married. All items will be verified.

The most important thing you need to know is that the purchase contract cannot contain any language about seller concessions or seller-paid closing costs, including owner’s title, and home and gas warranties. In addition, there cannot be any exchange of personal property or builder incentives. IMPORTANT: if you’re working with a builder and they are providing incentives, then a simple purchase price addendum can be created. A reputable lender will know what form you will need.

All new construction may require a Certificate of Occupancy (CO) once the home has been inspected and it’s determined to be move-in ready. FHA requires lenders to wait until the CO is issued before a loan application can be taken. The first step is to get a Pre-Approval letter (LHL Golden Ticket) from us prior to going into a contract with the builder. Please make sure to get us in touch with the builder so we can verify everything needed in the contract.

No, this is not a tax-payer-funded program. Every person that secures a FHA insured mortgage contributes to the Mutual Mortgage Insurance fund. In the case of regular (non LHL) FHA mortgage-insured loans, the borrower contributes part of their monthly payment to the fund. With the LHL Program, the lender pays FHA 0.25% of the loan balance per year (accrues onto loan balance) which creates a continuous stream of dollars into the insurance fund. The benefit of the LHL is that it is FHA-insured which means you or your heirs are NEVER Personally Liable for this debt.
On a traditional mortgage, the bank receives interest as part of the monthly payment. The LHL interest accrues in the background which causes the balance to increase over time. The bank makes its money on the total interest accrued at the time the house is sold.

The LHL is a home buying program for those with good credit and enough liquid assets to satisfy the down payment of about 55% of the purchase price, and also have enough left over to comfortably pay for taxes, insurance, and HOA fees.

Yes, you can use the LHL Refinance option to pay off your existing mortgage, create a monthly income, or set up a line of credit for emergencies.