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Who should consider an FHA Loan?

March 12th, 2008 12:03 PM

First Time Homebuyers
Borrowers with low credit scores
Borrowers needing down payment assistance
Loans for $365,000 or less in Minnesota should be evaluated for an FHA Loan.

Advantages –

Criteria (You must meet at least one)

FHA loans are not credit score driven.
FHA is also very forgiving when it comes to medical debt and student loans. In many instances medical debt is not counted and if your student loan is deferred for at least 12 months then it is completely ignored.
Even though there are no specific guidelines for credit scores, the lower limit is approximately 580 unless you have a co-borrower with a higher score.
No credit or credit score is Okay.

The length and stability of employment is rather important to FHA. Regular
W2 employees need at least two years of consistent income.
Self-employed and 1099 individuals with two years personal and business tax returns.
Recent College graduates with 30 days employment in career.

2 months of mortgage payments saved up and in your bank account for at least two months.
Therefore, if your mortgage payment will be $1000 per month, you need to have $2,000 in your bank account for at least 2 months.

Other Things you need to know -

You do not need down payment money, as FHA allows down payment assistance from non-profit organizations.
Property – Most single-family homes, condos and manufactured homes qualify for the program. The appraisal must be completed by an FHA qualified appraiser.
Mortgage Insurance Premium (MIP) FHA charges a onetime 1.5% mortgage insurance premium upfront. It is usually wrapped into the loan. If you sell or refinance the FHA Loan within the first seven years, the unused portion is refunded to you.
Monthly Mortgage Insurance Premiums - While MIP is a one-time charge, the borrower still needs to pay monthly mortgage insurance (MI) equivalent to 0.5% of the loan amount. If you are doing a 15-year FHA loan and putting more than 10% down, then you do not need to pay the monthly mortgage insurance.
Available FHA loan programs
1 year, 3 year and 5 year ARM’s (Adjustable Rate Mortgages)
30 Year Fixed Rate Mortgage15 Year Fixed Rate Mortgage
FHA allows purchase loans, rate and term refinances and cash out finances.
Remember, not all lenders are FHA approved! If your lender is not FHA Approved, they can’t offer you a FHA Loan.

Joe Cook, Loan Originator

Water Street Mortgage Corporation

Posted by Joe Cook on March 12th, 2008 12:03 PMPost a Comment (0)