FHA loans provide a great way for home buyers to purchase homes with very little down payment. In this article today we’ll discuss the latest FHA programs and some of the guidelines. The FHA mortgage programs that we’ll cover today include the standard FHA purchase loan, the FHA 203k loan for renovations and rehabs.
The FHA 203k loan this is for disaster areas, then a few of the refinance programs the FHA Streamline refinance along with the FHA cash out refinance. First the standard FHA purchase loan just some of the highlights for the program include a minimum downpayment of 3.5%
The program of course is a government backed standard 30 year or 15 year fixed mortgage. there is no early payoff penalty or penalties for selling your home, paying off the loan you can do that whenever you like without penalty just like any other government mortgage.
The credit score’s required for the maximum financing is generally within a five eighty to a six twenty credit score with most lenders and banks. Home buyers closing calls can be paid by the home seller up to six percent which is generally more than enough to cover all closing costs in prepaid requirements for tax and home insurance escrows.
FHA mortgage insurance premiums that can be rolled into the loan. the FHA loan of again like most of the government programs does require an upfront fee and that can be rolled into the homebuyers loan. the FHA loan is for regular single-family homes, townhomes and approved FHA condominiums.
Some additional information for the regular FHA purchase loan is the gift gift funds are permitted for the down payment family members etc can provide money as a gift to help the buyer with the down payment and/or closing costs.
Non occupying code borrowers are permitted a borrower needs maybe a co borrower to help qualify for the loan. that that is permitted keep in mind though with non occupying Co borrowers their good credit does not replace bad credit for the main applicant.
That’s important to remember low cash reserves with an FHA loan compared to most of the conventional loan programs out there. FHA is a nice option especially for first-time homebuyers that have little money saved up it doesn’t require really any cash reserves once, the down payment and closing costs are made.
This is the chart of the FHA mortgage insurance premium the monthly premiums and how it’s tiered based on the loan to value and the loan amounts its FHA is again like some of the other government loan programs where it requires a one-time upfront fee that can be included into the loan with fhh generally depending on its 1.75 percent of the loan amount and then it there is a monthly premium.
Okay most homeowners know that term is PMI but it’s a monthly premium mortgage insurance premium. that is based on of course the loan to value the loan amount among other factors but that is a simply a premium that’s added to the payment each month for the life one.
The FHA 203k loan this is a special renovation or rehab mortgage that provides financing for both the purchase and any needed repairs of the home. this includes maybe a new roof or new air conditioning new flooring, updating the kitchen or bath rooms of the home.
That is one of the nice advantages of 203k is for home buyers that maybe are purchasing a home that that just needs some repairs or updating boaters can finance post closing repairs needed to make the home livable and the appraisal is based on after improve value of the home.
So that is a neat thing for again a home that may need a little bit of TLC, this is a certainly good program and there’s a few variations of it for homebuyers that may need under thirty thousand dollars of repairs and then over thirty thousand dollars of repairs or renovations.
The FHA 203k CH loan, this is a special mortgage for people replacing homes that were destroyed and presidentially declared disaster areas. This includes victims of hurricanes may be victims of Hurricane Armond Florida hurricane Harvey in Texas or victims of all the wildfires recently in California, as long as it is a presidentially designated disaster area.
The 203 H loan may be used to finance the reconstruction of the borrower’s home or to purchase another home elsewhere. The 203 H is a hundred percent financing, there’s no down payment required like normal FHA loans.
One important factor is that applicants have up to one year to apply once the area is this declared, it doesn’t a disaster area. so there is a limitation if you will on how seeing you have to apply for the loan but this is certainly yes if you’ve been impacted by any of any declared disaster, a natural disaster definitely something you want to look into and there’s more details on the website FHA mortgage source.com.
Some of the FHA Refinance options for homeowners that currently have an FHA loan include the Streamline refinance program. This is a like it the name implies a very streamlined program requires very little in the way of documentation. There’s no new appraisal needed which is helpful for homebuyers that may be in a negative equity situation, meaning underwater or upside down and the value of their home.
That is relevant with the Streamline refinance program. homeowners can be underwater on the value of their home and this is great for really the homeowner that simply wants to reduce their interest rate and some there’s still a lot of REITs are still very low today and there’s still a lot of homeowners out there that may have higher rates from years ago, so this is certainly something that it’s good for those homeowners that just want to simply see if they can save on their monthly mortgage expenses.
The cash out refinance program, this is another program that were is limited to eighty five percent loan to value it does require a new appraisal. It will require full income and asset documentation just like a regular FHA purchase loan.
But this program is good for homeowners that do have equity and want to maybe cash out some of the equity to consolidate higher interest debt, maybe remodel their home pay for some needed repairs around the house, or pay off any other higher interests, maybe out of loans or installment loans or pay for college tuition among many other things, this can be a good option.
Home buyers and existing homeowners are encouraged to learn more again by calling 1-800 743 seven five five six seven days a week or just visit us at FHA mortgage source.com