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FHA Loans

FHA Mortgage May Be Right For You

The Federal Housing Administration (FHA), established in 1934, has become one of the most successful federal programs.  Basically an insurance agency within HUD (Dept. of Housing & Urban Development), its loans are insured by the Federal government, thus lowering the risk to the lenders that actually make the decisions and lend directly to the consumer.

Here are some reasons why a FHA mortgage may be right for you!

  • FHA loans are geared to first-time buyers, but others are eligible, including borrowers with little to no money and buyers with less than perfect credit.
  • Just 3.5 percent down payment is required, and all funds can be gifted by a relative, making it easier for someone with little cash to purchase a home now rather than waiting to build up a savings account.
  • The FHA allows the seller of the property to help with your closing costs by contributing up to six percent of the purchase price.
  • There are no income limits to obtain a FHA loan unlike other low down-payment programs for those with low or median income.
  • FHA loans are limited to owner-occupied properties and are available for one to four units. Three-to-four unit properties must be self sufficient.
  • 6) Qualifying ratios for FHA loans are more relaxed than the typical conventional financing, allowing the borrower to purchase a little more house.
  • Minimum credit scores are also more relaxed as long as the borrower pays monthly debts on time.
  • The borrower must have accumulated two years of continuous income in the same field of work.  Full-time students now working in their field of study may be able to count school as part of the two-year requirement.  All income must be reported on tax returns.
  • FHA also offers a Rehabilitation of Property Program, called a 203K.  That dream home you’ve discovered may need some repairs and rehabilitation.  This program allows the repair costs to be rolled into the loan.
  • Borrowers with a FHA mortgage on their current home may be able to refinance their loan into a lower interest rate without any out-of-pocket costs (or cash out at closing) up to 97 percent of the appraised value.