The days of flexible underwriting criteria have gone by the wayside for the most part. But, there are still common sense underwriting guidelines out there to meet the needs of the low-to-moderate income home buyer and homeowner. One of the most commonly used common sense programs is the FHA loan.

For the first time homebuyer with limited savings, the FHA loan is a great tool to buy a home with, since it requires a minimum down payment of only 3.5%, which may be a gift from family or down payment assistance like the City of Medford’s down payment assistance program recent released again for first time homebuyers who make less than 80% of the HUD median household income for Jackson County, or the released TODAY Neighborhood Stabilization Program for eligible home buyers who make less than 120% of the HUD median household income for Jackson County and are purchasing an eligible foreclosure home.

FHA has been one of the few options available to the home buyer who has lower credit scores and/or no credit scores. These credit scores requirements have been raised by many lenders, and have been tightened in conjunction with the debt-to-income ratio guidelines, but this is still a great loan. When compared side-by-side with a conventional loan with 5% down payment and private mortgage insurance, FHA wins hands down in most cases with private mortgage insurance’s higher credit score requirements and higher premiums. Even with FHA’s tightening criteria. There is still “credit scores as low as 580” allowed, but lenders offering this are now rare, and will likely be raising their credit score guidelines soon, too.

Be aware that “lender overlays” may be tougher than the actual requirements of HUD on the FHA loan, so if one bank is telling you they cannot help you, you might want to think about calling a mortgage broker who deals with many different banks. Just because one bank tells you “no” doesn’t necessarily mean all lenders will give you the same answer. For example, the company I work for is a bank AND a broker. Therefore, I must be familiar with the guidelines for many different lenders on these same loan programs. Until recently, I new that one bank was my “go to source” for co-signers high debt-to-income loans. I know to stay away from another lender when the borrowers “work in the industry” – are contractors, real estate brokers, appraisers or escrow/title people. I know that Oregon VA home loans need to qualify for private mortgage insurance’s tougher criteria, but recently changed to more flexible criteria, and when private mortgage insurance is not required, the Oregon VA home loan folks bend over backwards to help eligible Oregon Vets.

When compared with the USDA Guaranteed Rural Housing loan program, the FHA loan usually comes out more expensive. But, the FHA loan may be used to buy a home in Medford, Central Point, or Grants Pass when the USDA loan programs may not be used due to these cities’ population size and/or metropolitan status. And, the FHA loan may be used to purchase an existing manufactured home on its own lot/land that meets their requirements, whereas USDA programs may not.

Want to find out more about what programs are available to you based on your individual circumstances? You may attend a HUD Approved Homebuyer Education course like the “ABC’s of Homebuying” class Southern Oregon Housing Resource/ACCESS Inc. and Rogue Community College put on. The next class will be this Saturday, but due to the high level of activity in the entry-level price ranges with first time home buyers entering the market and the Homebuyer Education requirement of the Neighborhood Stabilization Program, this upcoming class is full (look for me as your instructor this time for the “ABCs of Closing”). Stay tuned for additional classes to be scheduled, or you may call me to schedule your free personal consultation.

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant – www.Quality4Loans.com

For additional tips on How To Buy A Home In The Rogue Valley, Oregon, follow these links:

How To Buy A Home in the Rogue Valley, Oregon | Using Neighborhood Stabilization Program Funds

How To Buy A Home in the Rogue Valley, Oregon | Using USDA Guaranteed Rural Housing Loan No Money Down Program

How to Buy A Home In The Rogue Valley, Oregon | If You Are A Self-Employed Borrower