FHA Loans
FHA Loans
FHA loans reflect the Federal Government's commitment to expanding homeownership and home buying opportunities through reduced down payment requirements, mortgage insurance charges, and relaxed underwriting standards when compared to conventional mortgage loans.
FHA has recognized Washington DC and other areas as a high housing cost area and has increased the maximum one family home mortgage amount to $234,650 increasing the number of homes which qualify for FHA insured financing. Nationally, the limits are as follows:
High cost area
One Family $239,250
Two Family $306,196
Three Family $370,098
Four Family $459,969
The FHA loan program is an outstanding choice for first time homebuyers because the program requires only 3% cash (which may be a gift) into the transaction and is significantly more forgiving of past credit issues. We will look specifically at the last two years of your credit history. If there are some credit problems, we may be able to overcome them with sufficient explanations and supporting documents of why the issues occurred. Never rule yourself out of qualifying for FHA loan because of credit, pre-qualify and have me review your credit. I have more information on FHA credit requirements available
This page is focused on the using FHA programs to purchase a home. If your interest is in refinancing an existing FHA or VA loan please go to my refinance center. For extensive information on the FHA 203(k) program to remodel a home please see my renovation loans page.
There are some credit issues that we must allow for a certain time to pass before you can qualify for a FHA loan. They are follows:
Two years from the date of discharge for a bankruptcy
Three years from the date of foreclosure
FHA requires any outstanding collection accounts, judgments, charge off's be paid in full before closing. If you have had some credit difficulties in the past, compensating factors can often get your loan approved.
ADVANTAGES OF FHA Loans
Lower required down payment
FHA loans are assumable* with a qualified borrower
Higher qualifying ratios of 29% for housing and 41% for total indebtedness on existing construction; 31% for housing and 43% for total indebtedness on new construction
More flexible underwriting standards
Gift funds for down payment and closing costs are allowed
Up-front Mortgage Insurance Premium can be financed
Less cash out of pocket required
The lowest down payment (as low as 3%, never more than 5%) requirement of any non-subsidized financing program
Non-occupant co-borrowers are allowed for qualifying purposes
Seller allowed to pay prepaid expenses
Seller can contribute up to 6% of purchase price toward closing cost and discount points
Charges on conventional loans such as tax service fees, underwriting fees, copy & courier fees are not allowed to be charged to the buyer with FHA loans
With FHA’s no cost streamlined refinancing you can lower your payment at NO COST to you. Usually, closings can occur within 2-3 weeks.
Rehab your house with only one loan using the FHA 203K program
The FHA ARM has the best features on the market with a 1% annual interest rate cap and a 5% lifetime cap.
If you currently have an FHA loan and are considering refinancing to lower your monthly housing cost there is a simple low cost “FHA streamline" refinance process which you should consider. One of the important features of the FHA program is that the loan is assumable should you sell in the future. If interest rates rise, an assumable mortgage may be the difference between being able to sell your home or not.
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