FHA Loan

About FHA Loans

FHA loans originate from the Federal Housing Administration and are insured by HUD (US Dept. of Housing) so that lenders can offer more affordable mortgage rates. FHA loans require lower down payments and closing costs. There are even options for financing 100% of the loan, as well as several grant programs that provide FHA loan customers financing for the down payment.

FHA loans offer options to those who’ve undergone bankruptcy or foreclosure. They’re available to first-time homebuyers and anyone who’s purchasing property and doesn’t already have an existing FHA loan. They are also available to those who are refinancing. The guidelines for debt ratio and job qualifications are more lenient than a conventional loan.

Features of FHA Loans

• Low, 3.5% down payment requirement on a purchase loan
• As little as 2.25% equity on a refinance of your current mortgage
• Refinance and pull cash equity from your home up to 85% of your home’s value
• Flexible credit guidelines
• Seller able to pay much of closing and prepaid costs
• Down payment, closing, and prepaid costs may be funded by a gift from a relative or a qualified non-profit grant
• May qualify for a streamlined refinance with no appraisal required
• Ability to buy up to a 4-unit property, to live in one unit and rent the others
• No income limitations

Consideration Points for Borrowers

• Little savings or little equity
• Less than perfect credit
• Need a non-occupying co-borrower
• Beginners rental property
• Alternative to a USDA Loan for properties not located in a USDA-eligible rural area
• Currently have an FHA Loan and wish to refinance

FHA Loan Qualifying

FHA loan requirements are more flexible than conventional loans and provide the easiest application. Below are the requirements for FHA loans:

• Need two years of consistent employment – preferred by the same employer.
• Income over the past two years is the same, or increasing.
• Credit guidelines vary; please ask Rebecca Foote Mortgage Team for details.
• Bankruptcies must be 2 years old; good credit since the bankruptcy
• Foreclosures must be 3 years old; good credit since the foreclosure.
• Mortgage payment of your new home must be around 30% of your gross income.

If you have any questions about FHA Loans, don’t hesitate to reach our to my team at (717) 609-4044. We are happy to answer your questions and would love to work with you!