Happy Home Buyers Just Got An FHA Home Mortgage
Many home buyers and home owners are choosing FHA mortgage loans as the way to finance their dream home. It was only a few years ago that FHA was not really an option for many people due to the number of other loan programs – but FHA has become almost the “loan of choice” for many people.
It used to be that FHA loans were just for first time home buyers or for people with less than perfect credit. Today, they have become more “mainstream”. One indication of this was pointed out by HUD Secretary Shaun Donovan in a recent speech to the National Association of Realtors where he pointed out that the average borrower credit score for an FHA loan went from 626 to 678 from Feb 2008 to March 2009. (See Donovan’s prepared speech on HUD.gov)
If you are not familiar with FHA home loans then the rest of this article provides some baseline information you can use to decide if this mortgage loan program is right for you.
FHA Mortgage Loan Highlights Include:
- No prepay penalty on and FHA home loan
- Monthly mortgage insurance is required on all FHA loans (aka PMI and UFMIP)
- Seller-paid closing costs are allowed with FHA loans
- 3.5% down payment required
- Gift funds from relative can be used for down payment and closing costs
- Government down payment assistance programs can be used for 3.5% down payment requirement
FHA Streamline Refinance
For those people who currently have an FHA loan, the FHA streamline refinance is the most popular way to refinance. The FHA streamline program allows you to refinance without having to get an appraisal, show pay stubs, bank statements or most other items that are necessary for most mortgage programs. If you have made your mortgage payment on time for the last 12 months, chances are that you will qualify for the FHA streamline program.
FHA 203k Streamline Program
The FHA 203k streamline loan is designed for people who want to buy a home that is in need of a few repairs. When you finance a home with the FHA 203k Streamline program, money is set aside for repairs can be paid directly to the contractors. Up to $35,000 can be set aside. 203k streamline loans can be tricky, so be sure to work with a loan officer who has experience helping people finance their home with a FHA 203k streamline loan
FHA 203k Rehabilitation Loan Program
The FHA 203k Rehab Mortgage Program is a great to buy a home that needs more than just the repairs that are covered with the 203k Streamline program. Similar to the regular FHA home purchase mortgage, home buyers using this program are required to have a 3.5% down payment – but in the case of the 203k mortgage – the borrower is also required to put 3.5% of the cost estimate to rehab the house down as well.
The 203k rehab loan can be used for refinancing as well.
FHA 85% Cash Out Program
For people wondering how much of their equity they can access with an FHA loan, the anwer is 85% – as in FHA will allow you to get up to 85% of your home’s value in the form of cash – providing there is not a mortgage on the home already.
