FHA Loans

**All your Purchase and Refinance needs at one stop!

Not all Brokers have the ability to do FHA loans.  It takes specific qualifications for the capabilities to do FHA loans.  We have these qualifications and knowledge to maximize this option.

USDA Guaranteed Rural Housing – FHA
**check bottom of page for this amazing Mortgage option for Low-Moderate income clients and families with 100% financing and no monthly Private Mortgage Insurance required**
Federal Housing Administration/FHA financing
U.S. Department of Housing and Urban Development
1-800-CALL-FHA (225-5342)
www.fha.gov
The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on  loans made by FHA-approved lenders throughout the United States and its territories.  FHA insures the mortgages on single family, multifamily, manufactured homes and hospitals.  It is the largest insurer of mortgages in the world; insuring over 34 million properties since its inception  in 1934.In 1965 the Department of Housing and Urban Development (HUD) was formed.  Within HUD operates the Federal Housing Administration (FHA), which has the primary responsibility for administering the government home loan insurance program.  This program allows a first time home buyer who might otherwise not qualify for a home loan to obtain one because the risk from the lender by FHA who insures the loan for the lender.Some of the benefits of FHA financing:*Great Mortgage for First Time Home buyers
*Don’t have to be a first time home buyer, only stipulation is can only have one FHA loan at a time
*Great for no established credit or past credit issues
*Low Down Payments (typically only requires 3.5% down and can be a gift fund from numbers of sources: relative, non-profit organization, or government agency
*Easy Credit Qualifying
*Eligibility with less than perfect credit
*A Loan at a reasonable cost
*Cash out from equity of your home to payoff debts or make home improvements
*Lower Interest Rate options which lowers your monthly payments
*No Prepayment Penalty
FHA Loan Comparison
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The FHA home loan program offers many advantages. Following is a comparison chart of the FHA loan program vs. other financing options.

FHA Home Loans Vs. Conventional Loans
3.5% Down Payment 5% Down Payment of own funds
1st Time Homebuyer Options- 3% Down
 Monthly Mortgage Insurance
.85% with 3.5% Down
.80% with 5% or more
For Lifetime of Mortgage
Lower Monthly Mortgage Insurance  (Depending on Credit Score)
Can be removed after required wait periods.
Lower Interest Rates Interest Rate Depends on Credit Score
Minimal Credit Score Rate adjustments Credit Scores Required and potential big Rate adjustments
Discount Points can be paid to lower rate. Discount Points can be paid to lower rate.
Can qualify for loan two years after Bankruptcy Must wait four years** after bankruptcy to qualify
Can qualify for loan three years after Foreclosure Must wait seven years after Foreclosure to qualify
Higher qualifying Ratio’s Controlled qualifying Ratio’s
Seller Can credit up to 6% towards buyers closing costs Average Seller Paid Closings Costs is 3%
Maximum Loan Size=  $279,450
(Maricopa County, Arizona)
Research Your County Loan Limits Here.
Conventional Maximun= $424,100
Maricopa County, Arizona
Loans above $424,100 are Jumbo
Research FannieMae Loan Limits Here.
Condos Must be FHA Approved. Can purchase non-warrantable condos

* 3% available at higher interest rate or with seller concessions.
** May qualify after three years if borrower receives loan approval via DU / LP automated underwriting approval.

Now that you understand some basic advantages and benefits of FHA loans,  you may view some of the basic programs available dependent on what type of transaction you are doing Purchase or Refinance

Not all brokers have the ability to do FHA financing.It takes a particular net worth as well as other strict qualifications in order for a broker to be granted FHA financing capabilities.  It also takes a sophisticated and knowledgable Mortgage Consultant to understand the options and the program potential in order to determine what kind of borrowers qualify for a FHA mortgage.  These FHA loans are not always easy to process and may take a bit more time and effort for both the new home owner as well as the Mortgage Consultant processing the loan transaction.  However, when the correct candidates come along, this a wonderful mortgage advantage that many homeowners need to take advantage of in order to maximize their buying ability and lower their rate and monthly payment.  Many brokers cannot do FHA due to lack of knowledge as well as lack of qualifications to do these FHA loans.  Only a selected portion of brokers with a standard of net worth and capabilities have the  authorization to provide this FHA loan to their clients.  These FHA mortgages rights are not granted to just ANY broker; they must have a higher standard than most other brokers.

The main advantage to a FHA loan is the credit criteria for a first time borrower are not as strict as Conventional Loans sold to Fannie Mae (FNMA) or Freddie Mac (FHLMC). Someone who may have had a few credit problems or no traditional credit should not have a problem obtaining FHA financing. Also, FHA home loans are assumable, allowing a person to take over the mortgage without the additional cost of obtaining a new loan. In addition, the seller or lender must pay for part of the “traditional” closing costs (called non-allowable costs) while a borrower’s allowable costs can partially be wrapped into the loan. The monthly mortgage insurance premium is cheaper for an FHA loan verses a conventional loan with 3% down.  Finally, FHA loans may may require less income to qualify as they will exceed the Conventional debt ratios of 28/36% as their standard is 29/41%.  To learn more about debt ratios, please see the income section.

Many people make the mistake and assume that FHA loans are only available for first time home buyers.  This is not true.  FHA loans are available to anyone, whether your first or fifth home and can be used to purchase a home or refinance a home.  If refinancing a home the current loan DOES NOT have to be an FHA loan.


The greatest disadvantage of FHA home loans is that FHA limits the loan size that a borrower can borrower   Please see the link for
FHA Loan Limits in your area.  Others may try and convince you that the FHA upfront mortgage insurance premium (MIP) is a disadvantage. However this amount makes just a very small increase in the borrower’s month payment and is partially refundable.

Many of these FHA loans allow these government assistance programs designed to assist with the minimum requirement of the 3% down payment.  When we have these government assistance programs involved in the transaction, we can structure a loan to virtually have zero down from the borrower’s own funds thus not requiring anything out of pocket from the buyer.

FHA loan limits are determined by the County the property resides.  Each county has a predetermined loan amount limit that FHA will allow for financing.  In order to obtain this amount outside of Maricopa County, please be sure to email me:
challas@omcmortgage.com.  I will be sure to give you the correct information based on the county the property is located.For Maricopa county, the current maximum loan amount allowed for financing is $279,450  This means if the purchase price is above this amount, the amount above $279,450 must be paid out of pocket towards the down payment for the property.  This is the maximum amount for a Single Family Residence.  There are increase loan amounts allowed for two-four family dwellings.  Again, please be sure to email or call me for specifics so I can be sure to give you the correct information.  This loan limit is due to change with HUD/FHA within the next 6-12 months which will open a great deal of financing options for home buyers.FHA purchases truly protect the buyer when it comes to choosing a property.  The property must be appraised by a certified FHA approved appraiser.  It must pass higher standards for a property than most Conventional properties and cannot be accepted as one of the “as is” properties.  What this means, is there cannot be any pending home improvements or hazard areas before the close of the purchase transaction.  All home improvements must be completed before the purchase transaction closes.  For example, FHA requires that all rooms be painted with no chipping paint in any areas.  If chipping paint exists, the chipped paint must be removed, corrected and then painted properly.  It cannot be a simple painting over the chipped areas.  This will not pass the FHA approval.  Any exposed wires from any electrical outlet cannot be exposed.  They must be properly covered and in full proper use.  The pool must have water in the pool as well as have proper chemical balance in order to close on the purchase transaction.  Keep in mind, all FHA loans are mentally treated as a purchase, so these are standards that also must be met with a refinance (regardless if the owner does not care about these minor details).  FHA will hold the same standards on all FHA mortgages.  These are just a few examples that show the reason FHA loans can be a smart choice for home buyers.

FHA Guaranteed Rural Housing

Rural Housing Service (RHS) was created in 1994 as a result of the Department of Agriculture Reorganization Act to meet housing and community development needs of rural America.

More rural families and individuals may be able to become homeowners with the assistance of the Rural Housing Services Programs.  The USDA Rural Housing Services has various programs available to aid low to moderate income rural residents to purchase, construct, repair or relocate a swelling and related facilities.

Section 502 loans are primarily used to assist low-income individuals or households purchase homes in rural areas.  Applicants for this loan may have income of up to 115% of the median income for the area.  Area limits for this program are here.

It is difficult to beat the flexibility and great rates of the USDA rural housing loans.   These programs are designed for the homebuyers who reside in rural areas of the country and who have little to no money to put down.  USDA rural housing loan programs offer flexible, common sense underwriting guidelines, relaxed credit requirements, no PMI (private mortgage insurance), lenient seller concessions, and competitive interest rates.  Your first step should be to call Cindy Hallas, your Mortgage Consultant, to see if you are in an area where properties may be eligible for USDA rural housing loans.  Cindy will research the property to determine this as well as glance at your income to determine if you are in the low to moderate income bracket required for this loan as well.  In today’s shrinking credit market, USDA rural housing loan programs are one of the best 100% financing options in the marketplace.  Give Cindy a call today.Cindy Hallas Banner - 14350

 

USDA Rural Housing Highlights:
*Loans may be financed up to 102% of the appraised value or purchase price of the home (2% funding fee can be financed into the loan)
*No PMI (private mortgage insurance – this is insurance to the lender that typically added additional monthly obligations which add to your monthly mortgage payment)
*Secure, fixed rate 30 year mortgage which is competitive to a conforming A paper loan
*Sellers can assist with paying buyer’s closing costs, prepaids (closing costs are fees associated to the mortgage transaction, prepaids are a combination of property taxes and home owners insurance premiums of the first year that are required to be collected up front from the lender as well as the interest that accrue in the first 30 days of the mortgage, which is the reason a homebuyer will not have a mortgage payment for a minimum of 30 days after the loan closing, again required to be collected up front)
*Little cash reserve needed for qualification on the loan

Eligibility Guidelines (basis list, may vary per client):
*Homebuyer must be a U.S. citizen, qualified alien, or legally admitted to the U.S. for permanent residence
*Adjusted annual household income cannot exceed the moderate income limits for the area.  A family’s size and child care considerations may increase chance for qualification of deductions are applicable.
*Primary residence only (no secondary home, vacation or investment properties)
*Home must be located in a rural area (Again Cindy will do the research to determine if the property is eligible for rural housing financing)

Information is also available:
USDA Rural Development
STOP 0701
1400 Independence Avenue SW
Washington D.C. 20515-0701
202-720-4323

http://www.rurdev.usda.gov/rhs/index.html

Please contact me for more information

Call or email me to get a glance of what a mortgage process should be.

I can also provide further education regarding Real Estate Investing. Please do not hesitate to ask me how I can further your education and resources to secure your real estate investments and your long term financial freedom.