The last several years have seen great changes in the mortgage industry. Many loan programs have been eliminated and others have had the requirements to qualify tightened.
One program that has stayed relatively in tack is the FHA Home Loan. The guidelines have remained relatively unchanged. Over the past few years the FHA share of the market has been increasing.
If you are looking for a loan there are a number of reasons to consider an FHA loan. They include:
- Smaller Down Payments - The required down payment is 3.5%. For most conventional loans the minimum down payment is 5%.
- Lower Credit Scores Required - Scores required on conventional loans have risen in the past 2 years. FHA score requirements have also risen but the tend to be lower than the scores required on conventional loans.
- The Entire Downpayment For An FHA Loan Can Be From A Gift - If you are short on cash the funds for the 3.5% downpayment can come in from gifted funds. There are some restrictions but, in general, the gift can come from a relative. In certain circumstances and non-relative can provide the gift.
- Less Of A Need For Established Credit - Although guidelines have tightened up recently, alternative sources of credit can be used. Lenders will want to see a stable history of paying bills for things like rent and utilities.
- Non-Occupant Co-Borrowers - If you can't qualify for the FHA loan based on your income, you can have someone who will not be living in the home help you qualify. This allows parents to help their children buy a home or a place to live while attending college.
- Seller Contributions - FHA loans allow the seller to contribute up to 6% of the purchasers closing costs. This means the only cash needed to purchase the home will be the required downpayment and that can come from a gift. There has been talk of reducing this to 3% like conventional loans but this has not occurred yet.
- Appraisals - Years ago FHA appraisals got a bad reputation because of repair requirements that were attached to many appraisals. This is no longer true. The appraisals, for the most part, are similar to appraisals done for conventional mortgages.
- There Are No Debt-To-Income Ratios - The loan approval is determined by a number of factors including loan-to-value, credit scores and reserves.
- Loan Limits - FHA loan limits vary in different parts of the country. In high cost areas the loans can currently go as high as $729,750 with a minimum downpayment of 3.5%. This is very helpful in high cost areas. These limits are subject to change and may be lowered in the future.
- FHA 203(k) Loans - If you are buying a home that needs some updating or repairs FHA has the 203(k) loan program that allows the cost of the repairs to be included in the loan amount. In effect you can borrow more than you paid for the house to make repairs and upgrades.
My direct line is 240.813.0614. So let me hear from you! Remember...it doesn't cost a penny to talk...so call right now and I will answer all your questions.
Alan Gross
Senior Mortgage Consultant
PrimeLending, A PlainsCapital Company
704 Quince Orchard Rd., Suite 230
Gaithersburg, MD 20878
Home Office: 240.813.0614
Email: agross@primelending.com
Web: www.mtg-info.net
Web: www.DCMilitaryVALoans.com
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