Great Post, Thanks for the information. That's a lot to absorb. I'll keep it all top of mind. Keep up the great blogs.

Thanks Jerry!

Hey Linda, Great post! A few other things buyers need to consider when looking at FHA; these are going to be full doc. loans, so if income can't be verified feasibly, then the customer will still need to consider a stated/stated product. As well, FHA loans will only allow 43% debt to income ratio, however lenders will sometimes take into account some allowances, creating a situation where the DTI can be increased a  little. As well, no matter what you may hear, FHA loans are, as you said, Government backed loans, and therefore processing time will take a little longer (you know how the Government can be!)! Awesome post! Glad to see you're "jumping back on that horse"! LOL

LOL, thanks for the additional info there Bo!

Linda, this is some great info for consumers! However, I feel compelled to respond to a comment above. FHA does not take necessarily take longer! This is not the case for us because we have in house FHA underwriters. I think that the commentor uses the red herring that because it is government backed, it will necessarily take longer; that is untrue and plays on the general mistrust of government. Government may be a favorite target of abuse but this is one thing the government does well! Delays are not inherent in FHA loans! Many brokers do not have FHA products because they do not use FHA approved lenders.

Rich thank you for your input.  I have always used lenders that had in house as you put it and I have done some FHA closings in two to three weeks if we had all our ducks in a row going in.  One main duck is being preapproved verses prequalified.

Linda, great piece on here. I would like to speak toward a few points that you make and also some that Bo states in his comments.

First and foremost, FHA guidelines for a customers debt to income ratio is 31% front end and 43% back end if a manual underwrite is needed.  With that said, if you get an accept through DU, DO, or LP, then you can be golden to write. 

As far as the time it takes to write a FHA loan, I have done almost all my FHA loans within a 14 day period and sometimes quicker.  

FHA does have loans where you can buy a home and get cash to renovate the home. Most convential lenders have ceased this product all together. 

FHA appraisals are more detailed than a regular conventional appraisal and will in most cases, cost more.

Regardless of what type of loan that you are doing, I always believe in having an inspection done. It will tell you what needs to be repaired now and what can wait. But, the biggest thing is, it will give you a checklist to accomplish down the road.

FHA can not be used to but a second home nor investment properties and also requires full doc. With that said, I have also seen them get an ACCEPT with $10 in the bank.

And, one of the main selling points that I tell customers is the fact that FHA has MIP and it is cheaper than the conventional PMI.

FHA is a great product as well in that for the majority of the loans that I can take conventional, I can beat the rates in FHA and get them a better MIP payment. Bottom line spells a better situation for the homeowner buying a primary residence.

All in all Linda, a great post.

Danny great information you added here.  I hope others that are knowledgable on the subject will chime in as I think this will make a nice piece to put together for my buyers.

Hey Linda, Sorry! Didn't mean to open up a can of worms, here. I would have never thought I'd be attacked on such generalized points as I was making...I agree with Danny in all of his points, once the full packet is submitted, FHA really shouldn't take more than 7-10 days for clearance to close. His other points are right on target as well. One does have to expect more detail in the transaction, and MIP insurance is less expensive.There is an initial fee to have MIP set up, but this is rolled into the closing costs as a general rule. If I came across as not being supportive of FHA, please let me apologize. I am a major advocate of FHA, and have stated such in one of my recent posts ("Down Payment Assistance..."). 

 Rich, I didn't mean to ruffle your feathers with the Government inference, I believe they do regulate FHA well, they need to be more thorough and precise when their money is at stake. I wish some of our conventional lenders would have taken the same stance before the market developed to this level! 

 Again, sorry Linda for stirring up the pot, and I apologize to Danny and Rich for my generalized additions. I just didn't want to go so in depth on Linda's post.

No need to get so defensive, boys, we're all on the same side!

FHA may come back in vogue because of the tightening of other credit forms.

Bo I think it is just a healthy discussion of what goes into this fine product.  I love knowing what the limits are and why some lenders get the job done quickly while other may take longer.  Debate is the name of the game all I ask is everybody stays civil, courteous and just plays darn nice, lol.

Now, Gayle when was FHA never in vogue.  I have clients who use this product all the time.  If you know what you are doing as a realtor with the limits that are allowed with regards to inspections, codes, and now with knowing loan limits etc. I just can't imagine not using it.  Of course I don't deal in second homes, most of my clients are first time home buyers and they need someone who knows the ropes to help them through the process.  I have known going into homes to look at them with my clients that they were expecting to use the FHA and could see things such as no electricity or missing water heaters on bank owned properties that I could steer them away from.  I even found a hole from the inside floor to the outside of one home that had been covered up by new carpeting.  A qualified FHA inspector would have found that and thrown that home out.

I just can't imagine not being aware of this product and what it can do for the first time home buyer anyone would not jump at the chance of home ownership.

Now, I am off to bed you boys and girls play nice while I am gone, you hear!

Hey, thanks Linda, sometimes I just think that maybe I've overstepped by bounds when I'm commenting...my mom always told me that I have a "gift of gab", and I really try hard never to be offensive. Those fellows seem to be good guys, and I respect the fact that they are so dedicated and knowledgeable in their profession.

Great information. Both on the post and comments. I was just commenting to a lender at a local bank yesterday that in the past year, every buyer I've worked with has gotten a FHA or VA loan. I wouldn't know how to act with conventional financing!

Thanks for the great information. I've never had a buyer do a FHA loan before but am currently working on one with a VA loan, so I'm learning about that process.

Bo, I do not think that either of us are being defensive. I just want to make sure that consumers are aware of the pros as well as any cons that might be out there about FHA. I for one am not a firm believer in doing stated deals. I think that this is one of the downfalls to our industry today.

With that said, if you have great credit, then I think you have earned the right to go stated, but not on a W2 wage earner. Your income is proveable so, why not prove it. Unless there is something to hide.

For us, we write all of our FHA in house, which gives us the ability to do it quickly, whether it is a full file submission or not.  

Excellent post. FHA loans can be an extremely viable form of financing. In today's lending market, more prospective buyers should explore FHA as a source of financing.

Bo--no overstepping Danny and Rich both know their stuff when it comes to FHA or any type of loan.  They are great guys and I think knowing what it is all about will help the consumer in the long run.

Lissa--that is what I am talking about I have done a couple of conventional loan deals but they are so dang few and far between that I have caught myself asking the lender if they need anything else documentation wise.

Kelly--have fun learning the ropes on this one.  You will find that after you do one you are doing them more and more. 

Danny--I don't like stated deals either they make me so nervous going into the sale.  I would rather my lender be able to verify funds even if it is 10 dollars in the account, lol.

Derrick--I am glad you stopped in and thank you for your kind words.  I think as more buyers get off the fence now that spring has sprung this is what we will see.

Linda, I agree with both you and Danny regarding stated/stated products... They make me nervous as well. I must say that I do offer them, however, as I feel they have some use in the lending world... The new business owner who has difficulty verifying his income due to the tax write-offs he takes, the wait staff and bartenders who's income is primarily derived from tips, etc.

 Many people don't realize that when you write off everything, or that you don't claim all of your earnings through the 1099, it could adversely affect your ability to finance. Several lenders are actually moving away from allowing W-2 wage earners from going stated, which may be a good thing, except possibly for those who have a low income primary occupation, and do lawn service or wait tables  as a second job.

Lenders that offer stated/stated also have some checks and balances built into the system, with computer programs designed to account for average earnings of particular job types, in various locations around the country, in an effort to help prevent falsification of income earned. As well, even with stated/stated products, the lender requires verification of funds required to close prior to allowing clearance to close. All in all, stated/stated is a shaky product in my opinion, and with the lenders tightening standards around these products as well, they seem to feel the same way.

I would, and do advocate that FHA is the way to go today, with interest rates being lower, mortgage insurance being less expensive, and credit issues being a little more lenient than conventional products these days.

Again, Danny, apologize for generalized statements; your comments were truly information-based, and I appreciate the information you provided.

Well this has turned into a nice little discussion.  I think the wait staff etc. have income these days to back up what they make.  At least I know that I did when I was serving.  The eateries have started making sure that you claim your tips now which does show up on your W-2. I am not sure about all the people that might be trying to explain what or where there money is coming from.