Laws & Regs

Office of Assistant Secretary for Housing, HUD
his or her creditors for his or her account and with his or her consent.
[36 FR 24508, Dec. 22, 1971, as amended at 45
FR 29278, May 2, 1980; 48 FR 28804, June 23,
1983; 49 FR 21319, May 21, 1984; 53 FR 34281,
Sept. 6, 1988; 54 FR 39525, Sept. 27, 1989; 57 FR
58347, Dec. 9, 1992; 61 FR 36263, July 9, 1996]

WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 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 § 203.29, as announced in accordance with § 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

§ 203.18

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

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§ 203.18

24 CFR Ch. II (4–1–11 Edition)

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 § 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

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

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WReier-Aviles on DSKGBLS3C1PROD with CFR

Office of Assistant Secretary for Housing, HUD
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
§ 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 § 203.15; and
(ii) Borrower-paid closing costs allowed under § 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 § 203.18(b), § 203.18(e) or
§ 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

§ 203.18b

percent, in the case of a mortgage with
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 § 203.18, see the List of CFR
Sections Affected in the Finding Aids section of this volume.

§ 203.18a Solar energy system.
(a) The dollar limitation provided in
§ 203.18(a) may be increased by up to 20
percent if such an increase is necessary
to account for the increased cost of the
residence due to the installation of a
solar energy system.
(b) Solar energy system is defined as
any addition, alteration, or improvement to an existing or new structure
which is designed to utilize wind energy or solar energy either of the active type based on mechanically forced
energy transfer or of the passive type
based on convective, conductive, or radiant energy transfer or some combination of these types to reduce the energy requirements of that structure
from other energy sources and which is
in conformity with such criteria and
standards as shall be prescribed by the
Secretary in consultation with the Secretary of Energy.
[45 FR 51770, Aug. 5, 1980]

§ 203.18b Increased mortgage amount.
(a) If any party believes that a mortgage limit established by the Secretary

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