FHA Loans

FHA loans have been helping people become homeowners since 1934. FHA stands for Federal Housing Administration. FHA does not actually lend the money. They simply insure 100% of a loan amount that a lender funds, assuming that the loan conforms to FHA guidelines. FHA is part of Housing and Urban Development (HUD), the federal department responsible for the major housing programs in the United States. HUD sets the guidelines for qualifying and states what loans they will insure. FHA programs and guidelines tend to be the most flexible, since it is a government insured loan whose primary concern is to provide housing for all U.S. citizens.

FHA Lending is exploding!
♦Now represents >30% of loans being written
♦Geared for:First time buyers
♦Borrowers with little to no money
♦Buyers with less than perfect credit
♦Non-occupant co-borrowers

FHA Highlights
♦Limited to owner-occupied property
♦Available for 1-4 unit properties
♦High LTV available for OO 4 unit
♦Flexible down payment sources allowed
♦Good documentation is the key

FHA Loan Limits
♦Limits vary by county
♦Our county limit is: $625,000
♦Loan limit is before UFMIP is included
♦Higher loan limits for 2-4 unit properties

FHA Credit
♦We require at least a 640 FICO score
♦Last 12 months should show no late pmts.
♦Judgments typically must be paid
♦Collections not required to be paid
♦Letter of explanation should be in the file for all bad credit
♦Non-traditional credit allowed

Want a fixer-upper?
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.

Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.

Additional info
Most loans use a method of analyzing credit called credit scoring in the underwriting process. Studies have demonstrated a direct relationship between low credit scores and higher mortgage delinquency rates. As a result many lenders have established minimum credit scores at which they will accept loans.

Unfortunately, a lack of credit, old delinquencies or incorrect information on the credit report can cause a low credit score. Although a high credit score may assist in getting the mortgage approved, a low score is not automatically cause for denial. If the credit scores are low, then it is up to the borrower to demonstrate his/her ability and willingness to pay the loan back. This allows the borrower to explain the circumstances surrounding the credit difficulties and have that explanation considered in the underwriting process.

The underwriter on an FHA loan will review the credit and payment history of a customer concentrating on the most recent 12 to 24 months. If the customer has had a good payment record over the past 12 to 24 months they can often get approved for a mortgage even when Conventional financing has turned them down. FHA tends to be more flexible than Conventional financing in the money needed to purchase the home.

The interest rate that you select will also have a bearing on the total costs. If you select a lower rate so that you can reduce your payment, you may end up paying additional money towards "points".

FHA allows the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, grants, loans from retirement accounts and seller contributions.