FHA is becoming a very popular option to both market a home and for borrowers looking for some creativity and flexibility to qualify for their dream home. FHA mortgages can be both traditional 30yr and 15yr fixed rates, and Adjustable rates with low annual caps are available. Benefits to an FHA mortgage are the new expanded lending limits which varies by county, but for single family homes in Fairfield county the new limit is $708,750. This goes up to $1,363,000 for a 4 family owner occupied home. Consider FHA if you have debt to income ratios higher than a conforming mortgage would accept. Conservative banks underwrite to a 38% Debt to Income ratio, while FHA may approve a loan with good compensating factors to 45-55% DTI. FHA allows the down payment to be 100% gift. FHA is NOT credit score driven, so if you have a buyer with a 580 score, consider FHA. FHA does not recognize "soft or distressed" market designations like Fannie Mae or Freddie Mac, so you can still buy with 3% down and get insurance on the loan. FHA allows for a non-occupant co-borrower income to count 100% toward the transaction, compared to helping just 5% in the ratios with a Fannie or Freddie Loan. FHA will usually do spot approvals in condominiums with a 51% owner occupancy, where Fannie/Freddie looks for 60% owner occupancy. FHA offers renovation loans on purchases, so you can take that raised ranch and replace the kitchen, bath, and even add a deck with a hot tub. Consider an FHA mortgage, so your seller can structure a deal and give a concession via an approved 3rd party for not only closing costs, but down payment (not allowed in traditional financing).
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