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FHA Loans

An FHA loan is a loan insured by the Federal Housing Administration (FHA). Most of the FHA programs are designed for first time homebuyers and low to moderate-income borrowers. FHA loans have lower down payment requirements and are easier to qualify for than conventional loans. FHA loans cannot exceed the statutory limit, which varies according to the county you live in.

There are many good reasons to obtain an FHA loan including:

Your complete down payment and closing costs can be gifted by a family member
3 1/2 percent minimum down payment with the buyer having a minimum of 3 1/2 percent committed in the transaction (can be gifted).
Separate approval from PMI companies not required.
Minimal assets to close (3 1/2 percent).
Non-occupying co-borrowers are o.k. (must be family members).
Up to 6 percent sales concessions permitted that can cover discount points, prepaids, escrows and closing costs.
More liberal qualifying ratios (31%/43%) that can be exceeded with compensating factors (i.e. larger down payment, reserves, excellent credit, etc.).
FHA is more lenient on negative credit (620 minimum FICO score)
Can provide non-resident aliens with affordable financing.
High loan-to-value financing on FHA approved condominiums.
High loan-to-value financing on multi-family units (up to four units).
FHA counts 85 percent rental income on owner occupied multi-family units.
All FHA loans must be full income documentation and owner occupied.
Residential Home Funding Corp. is a direct endorsed FHA lender, which allows in house origination, processing, underwriting and closings.
Rates are very competitive in all credit levels.

Lower Rates

An FHA loan has competitive interest rates because the Federal government insures the loans for lenders. Always compare an FHA loan with other loan types.

Easier to Qualify

Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

If You Have Less Than Perfect Credit

You don't have to have perfect credit to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan. A minimum 620 FICO score is required for FHA financiang.

More Protection to Keep Your Home

The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, the FHA has many options to help you keep you in your home and avoid foreclosure.

FHA does not give money to people for a home and it does not set the interest rates on mortgages it insures. FHA insures loans for lenders against defaults. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA-approved lender can help you start the loan application process.

You may use an FHA-insured mortgage to purchase or refinance a new or existing 1-4 family home or a condominium unit.

How does a FHA loan Compare to a Conventional Loan?

Conventional loans usually require a larger down payment. And, if you have less than perfect credit you may not qualify for many conventional loans and find yourself being offered loans with higher interest rates and/or fees than you expected. The best thing to do is compare the cost of the conventional loan to an FHA loan line-by-line. What are the fees on each? What is the interest rate? How much is the mortgage insurance on each? How much down payment is required? For some borrowers, a conventional loan may be less expensive. For many others, it will be more expensive than FHA.

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