delete (price, build, vent, worth)

[HoustonTexasEngineer]

Im being told that my new home im planning on buying has an estimated appraisal value around 450k... this is a turn key modular home build and im only paying 320k (for the land, land work, septic, well, and modular home)... How is this a problem and why cant I get the loan?

I'm being told that:

Not sure if you spoke with (the finance guy) yet, but I think the issue with a high appraised value is that it’ll require a larger down payment on your end. FHA is 96.5% LTV, so an appraised value of $450K results in a loan amount of $434,250. Then factor in that the max FHA loan amount is $305K’ish and you're left with sizable down payment that’s needed to bridge that gap. At least that’s what I understand the problem to be. Again, (the finance guy) can confirm this.

[HoustonTexasEngineer]

I still don't understand this problem though. If I'm only paying 320ish and put 15k down and we sign the contract stating this, how would a high appraised value matter if the bank isn't loaning me the appraised value, they're only loaning me the 305k. wouldn't a higher appraised value mean they are taking on less risk of losing out if I were to default on the loan? I know on the other end of the spectrum (lower appraised value then contract price) it causes problems.

[NC211]

Put this in the life bucket of "getting lucking without realizing it" category.


With an appraised value of $450k, you're looking at a loan to value (LTV) of less than 70%. You do not want an FHA loan for this purchase. Why? Because you'll be wasting thousands of dollars on their Private Mortgage Insurance (PMI) requirement each year.


At that LTV, assuming your credit rating is good, you need to get a traditional conventional mortgage instead. No PMI in those at that LTV. Only thing you won't have with the traditional mortgage that you get with the FHA is the ability to transfer the actual mortgage itself with the sale of the house at a later date (assumable clause in FHA). But again at that LTV, the likelihood that this assumable clause will be of any benefit to you is very very very low.


How sure are you that it's worth $450k? What's that based upon?


If you want to continue down the road of the FHA, then yes, you really need to discuss with "the finance guy". Because anyone who tells you they can't make you a loan because the leverage is too low, is without a doubt the WRONG lender you want to have anything to do with, period. Seriously, no joke, run away from them.