[Code of Federal Regulations]

[Title 24, Volume 2]

[Revised as of April 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR203.18]



[Page 153-156]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

 CHAPTER II--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 

        COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

 

PART 203_SINGLE FAMILY MORTGAGE INSURANCE--Table of Contents

 

     Subpart A_Eligibility Requirements and Underwriting Procedures

 

Sec.  203.18  Maximum mortgage amounts.



    (a) Mortgagors of principal or secondary residences. The principal 

amount of the mortgage must not exceed the lesser of the following 

amounts that apply:

    (1) The dollar amount limitation that applies for the area under 

section 203(b)(2)(A) of the National Housing Act including any increase 

in the dollar limitation under Sec.  203.29, as announced in accordance 

with Sec.  203.18(h);

    (2)(i) The amount based on appraised value that is permitted by 

section 203(b)(10) of the National Housing Act, if that provision is in 

effect and applies to the mortgage; or

    (ii) If section 203(b)(10) is not in effect or otherwise does not 

apply to the mortgage, the lesser of the amounts based on appraised 

value that are permitted by section 203(b)(2)(B) of the National Housing 

Act and paragraph (g) of this section;

    (3) An amount equal to 90 percent of the appraised value, if the 

dwelling is a new home that was completed 1 year or less from the date 

of the mortgage insurance application and the dwelling is neither 

approved before the beginning of construction or covered by an 

acceptable consumer protection or warranty plan as provided in section 

203(b)(2)(B) of the National Housing Act; or

    (4) An amount equal to 85 percent of the appraised value if the 

mortgage covers a dwelling that is to be occupied as a secondary 

residence (as defined in paragraph (f)(2) of this section).

    (b) Veteran qualifications. The special veteran terms provided in 

section 203(b)(2) of the National Housing Act shall apply only if the 

mortgagor submits one of the following certifications:

    (1) A certification issued by the Secretary of Defense establishing 

that the veteran performed extra hazardous service while serving in the 

armed



[[Page 154]]



forces for a period of less than 90 days; or

    (2) A Certificate of Eligibility from the Department of Veterans 

Affairs establishing that the person served 90 days or more on active 

duty in the armed forces (U.S. Army, Navy, Marine Corps, Air Force, 

Coast Guard, the Army Reserve, the Naval Reserve, the Marine Corps 

Reserve, the Air Force Reserve, the Coast Guard Reserve, the National 

Guard of the United States, or the Air National Guard of the United 

States); that he or she enlisted before September 8, 1980; and that he 

or she was discharged or released under conditions other than 

dishonorable (a copy of the veteran's discharge papers or Form DD-214 

shall be submitted with the certificate); or

    (3) A Certificate of Eligibility from the Department of Veterans 

Affairs establishing that the person:

    (i)(A) Originally enlisted in a regular component of the armed 

forces after September 7, 1980; or entered on active duty after October 

16, 1981, and he or she had not previously completed a period of active 

duty of at least 24 months or been discharged or released from active 

duty under 10 U.S.C. 1171; and

    (B) Has completed, since enlistment or entering on active duty, 

either:

    (1) Twenty-four months of continuous active duty, or the full period 

for which he or she was called or ordered to active duty, whichever is 

shorter; or

    (2) Any other period of active duty if he or she was discharged or 

released from duty under 10 U.S.C. 1171 or 1173; was discharged or 

released from duty for disability incurred or aggravated in the line of 

duty; or has a disability which the Department of Veterans Affairs has 

determined to be compensable under 38 U.S.C. chap. 11; and

    (ii) Was discharged or released under conditions other than 

dishonorable (a copy of the veteran's discharge papers or Form DD-214 

shall be submitted with the certification).

    (c) Eligible non-occupant mortgagors. A mortgage may be executed by 

an eligible non-occupant mortgagor (as that term is defined in paragraph 

(f)(3) of this section) for up to an amount authorized for the 

appropriate loan type in paragraph (a) of this section except where a 

lesser amount is expressly provided for in this part.

    (d) Outlying area properties. A mortgage covering a single family 

residence located in an area in which the Commissioner finds that it is 

not practicable to obtain conformity with many of the requirements 

essential to the insurance of mortgages in built-up, urban areas; or a 

mortgage covering a single family dwelling that is to be used as a farm 

home on a plot of land that is two and one-half or more acres in size 

and adjacent to an all-weather public road, may not exceed:

    (1) In the case of a mortgagor who is to occupy the dwelling as a 

principal residence (as defined in paragraph (f)(1) of this section):

    (i) 75 percent of the dollar limitation under (a)(1).

    (ii) 97 percent of the appraised value of the property as of the 

date the mortgage is accepted for insurance, if:

    (A) The Commissioner approved the dwelling for insurance before the 

beginning of construction; or

    (B) Construction was completed more than one year before the date of 

the application for insurance; or

    (C) The Secretary of Veterans Affairs approved the dwelling for 

guaranty, insurance, or direct loan before the beginning of 

construction.

    (iii) If the property does not meet the requirements of paragraph 

(d)(1)(ii) of this section, 90 percent of the appraised value of the 

property as of the date the mortgage is accepted for insurance.

    (2) In the case of a mortgagor who is to occupy the dwelling as a 

secondary residence (as defined in paragraph (f)(2) of this section):

    (i) The amount permitted in paragraph (d)(1)(i) of this section, or

    (ii) 85 percent of the appraised value of the property as of the 

date the mortgage is accepted for insurance.

    (e) Disaster victims. A mortgage covering a single family dwelling, 

in an amount not in excess of the maximum dollar limitation specified in 

paragraph (a)(1) of this section (unless a higher maximum mortgage 

amount is authorized under Sec.  203.29), and not in excess of the 

lesser of 100 percent of the appraised value of the property or the cost 

of acquisition as of the date the



[[Page 155]]



mortgage is accepted for insurance, shall be eligible for insurance if:

    (1) The mortgage is executed by a mortgagor who is to occupy the 

dwelling as a principal residence (as defined in paragraph (f)(1) of 

this section);

    (2) The mortgagor establishes that the home which he or she 

previously occupied as owner or tenant was destroyed or damaged to such 

an extent that reconstruction or replacement is required as a result of 

a flood, fire, hurricane, earthquake, storm, riot or civil disorder or 

other catastrophe which the President has determined to be a major 

disaster; and

    (3) The application for insurance is filed within one year from the 

date of such presidential determination, or within such additional 

period of time as the period of federal assistance with respect to such 

disaster may be extended.

    (f) Definitions. As used in this section:

    (1) Principal residence means the dwelling where the mortgagor 

maintains (or will maintain) his or her permanent place of abode, and 

typically spends (or will spend) the majority of the calendar year. A 

person may have only one principal residence at any one time.

    (2) Secondary residence means a dwelling: (i) Where the mortgagor 

maintains or will maintain a part-time place of abode and typically 

spends (or will spend) less than a majority of the calendar year; (ii) 

which is not a vacation home; and (iii) which the Commissioner has 

determined to be eligible for insurance in order to avoid undue hardship 

to the mortgagor. A person may have only one secondary residence at a 

time.

    (3) Eligible non-occupant mortgagor means a mortgagor (or co-

mortgagor, as appropriate) who is not to occupy the dwelling as a 

principal residence or a secondary residence and who is--

    (i) A public entity, as provided in section 214 or 247 of the 

National Housing Act, or any other State or local government or agency 

thereof;

    (ii) A private nonprofit or public entity, as provided in section 

221(h) or 235(j) of the National Housing Act, or other private nonprofit 

organization that is exempt from taxation under section 501(c)(3) of the 

Internal Revenue Code of 1986 and intends to sell or lease the mortgaged 

property to low or moderate income persons, as determined by the 

Secretary;

    (iii) An Indian tribe, as provided in section 248 of the National 

Housing Act;

    (iv) A serviceperson who is unable to meet the occupancy requirement 

because of his or her duty assignment, as provided in section 216 of the 

National Housing Act or subsection (b)(4) or (f) of section 222 of the 

National Housing Act;

    (v) A mortgagor or co-mortgagor under subsection 203(k) of the 

National Housing Act; or

    (vi) A mortgagor who, pursuant to Sec.  203.43(c) of this part, is 

refinancing an existing mortgage insured under the National Housing Act 

for not more than the outstanding balance of the existing mortgage, if 

the amount of the monthly payment due under the refinancing mortgage is 

less than the amount due under the existing mortgage for the month in 

which the refinancing mortgage is executed.

    (4) Appraised value means the sum of:

    (i) The lesser of sales price (with any adjustments required by the 

Secretary) or the amount set forth in the written statement required 

under Sec.  203.15; and

    (ii) Borrower-paid closing costs allowed under Sec.  203.27(a)(1)-

(3), except that closing costs do not apply if section 203(b)(10) of the 

National Housing Act is in effect and neither sales price nor closing 

costs apply for purposes of paragraph (g) of this section.

    (5) Undue hardship means that affordable housing which meets the 

needs of the mortgagor is not available for lease, or within reasonable 

commuting distance from the mortgagor's home to his or her work place.

    (6) Vacation home means a dwelling that is used primarily for 

recreational purposes and enjoyment, and that is not a primary or 

secondary residence.

    (g) Maximum principal obligation. Except for mortgages meeting the 

requirements of Sec.  203.18(b), Sec.  203.18(e) or Sec.  203.50(f), and 

notwithstanding any other provision of this section, a mortgage may not 

involve a principal obligation in excess of 98.75 percent of the 

appraised value of the property (97.75 percent, in the case of a 

mortgage with



[[Page 156]]



an appraised value in excess of $50,000), plus the amount of the 

mortgage insurance premium paid at the time the mortgage is insured.

    (h) Notice of maximum mortgage amount. A maximum mortgage amount 

based on the 1-family median house price for an area under paragraph 

(a)(1) of this section may be made effective by:

    (1) Providing direct notice to affected mortgagees through an 

administrative issuance; or

    (2) Publishing a notice in the Federal Register.

    (i) Energy efficient mortgages. The principal amount of energy 

efficient mortgages may exceed the maximum amounts determined under 

paragraph (a)(1) of this section under conditions prescribed by the 

Secretary in accordance with section 106 of the Energy Policy Act of 

1992.



[36 FR 24508, Dec. 22, 1971]



    Editorial Note: For Federal Register citations affecting Sec.  

203.18, see the List of CFR Sections Affected in the Finding Aids 

section of this volume.