Section 203(b) Home Mortgage Insurance insures lenders against losses on mortgage loans used to

• finance the purchase of proposed, under construction, or existing one- to four-family dwellings or manufactured homes, or
• refinance indebtedness on existing housing.

The maximum insurable mortgage under Section 203(b) is determined by the lesser of the

• statutory maximum loan limit, or
• applicable loan-to-value (LTV) ratio.

References: For information on

• statutory loan limits, see HUD 4155.2 1.C.2.c, and
• maximum LTV ratios, see HUD 4155.2 1.C.2.d.

Statutory loan limits for home mortgage loans under 203(b) in high-cost areas are based upon the median sales prices in the area. Statutory limits may be 50 percent higher in Alaska, Hawaii, Guam, and the Virgin Islands.

Note: Dollar limitations may be increased by up to 20 percent if the increase is directly attributable to the cost and installation of a solar energy system on the property.

Reference: Statutory loan limits may be found

• on the HUD Web site at www.hud.gov, or
• by accessing the FHA Connection at https://entp.hud.gov/clas/.

The maximum LTV for a property depends upon

• the stage of construction (such as proposed construction, under construction, or existing home, and
• the appraised value and sales price.

Note: Although the up-front mortgage insurance premium (UFMIP) may be financed, do not include it when applying the appropriate LTV.

References: For more information on maximum LTVs for

• properties in different stages of construction, see HUD 4155.1 2.B, and
• refinance transaction, see HUD 4155.1 3.B.

Borrowers are required to invest the difference between

• the total acquisition cost (sales price, cost of any required repairs paid for by the borrower, and total closing costs to be paid by the borrowers), and
• the amount of the mortgage to be insured.

The table below contains additional policies regarding a borrower's minimum investment.

Under Section 203(b), the mortgage term is any term up to 30 years.

Under Section 203(b), mortgage insurance premiums (MIPs) are paid as up-front mortgage insurance premium (UFMIP) and monthly.

Refinancing is permitted in conjunction with rehabilitation.