FHA loans
HUD - Department of Housing & Urban Development is the government agency responsible for national policy, and home mortgage programs that address the housing needs. The FHA Federal Housing Administration which is under HUD plays a major role in helping homeownership by evaluation homeownership for lower and moderate income homeowners. FHA helps first time home FHA buyers, and others who might not be able to meet down payment guidelines. Conventional/conforming mortgage loans can be more difficult to obtain. FHA provides the mortgage insurance (MIP) to private mortgage lenders. Everyone, who has a good credit file, enough assets to close the mortgage loan, and sufficient steady income to make monthly mortgage payments can be approved for an FHA loan. To get a FHA mortgage loan, you need to apply to a HUD approved mortgage lender. FHA mortgages are available for single family residences, for 2 unit, 3 unit, and 4 unit properties, and for condos. Mortgage rates for FHA mortgage loans are generally market rates, while the down payment is much lower than conventional mortgage loans. They are very helpful for those looking to get out of PMI, and do a FHA rate term refinance. Down payments can be as low as 3% percent, and the closing costs can be paid by the seller.
With an FHA mortgage loan, you can make extra mortgage payments toward the principal when you make your regularly monthly mortgage payment. By making extra mortgage payments, you can repay the FHA loan faster, and save on the mortgage interest paid throughout the lifetime of the loan. You can also pay off the whole balance of your FHA mortgage loan at any time without incurring any penalties. You may also do a FHA Streamline refinance which will help you refinance with less paperwork.
Section 203b FHA mortgage program is the most frequently used. You may use this FHA loan program to do a FHA purchase a new or existing one to four family residences, including manufactured homes, in both rural and urban areas. A section 203b FHA fixed mortgage loan may be repaid in monthly mortgage payments over 10, 15, 20, 25, or 30 years. This FHA loan can also be used for FHA cash out refinance.
Section 234c FHA Loans provides mortgage insurance for home buyers who wish to buy a unit in a condo project. The condo may consist of more than one building, such as a group of row apartments, high rise buildings, town homes, or any combination of these structures. Any condo project must be approved by HUD.
In some cases, HUD insures mortgage loans (section 237 mortgage loans) for people who have had credit issues, and do not meet standard credit parameters to purchase low cost homes.
FHA also insures mortgage loans for home improvements – FHA 203k mortgage loans. Section 203k FHA mortgage loans allow you to purchase or refinance, and rehabilitate a home of at least 1 year old. A portion of the mortgage loan proceeds are used to payoff the existing mortgage, and the remaining funds are placed in an escrow account, and released as rehabilitation is finished. The improvements financed with FHA 203k mortgage loan proceeds must comply with HUD’s ‘Minimum Property Standards’, and all local codes and ordinances.
FHA Loan Limits – varies by county. Most counties are approximately 271,050, and most large metropolitan areas can be up to 729k. Loans above the 362k mark will be considered a FHA Jumbo. You can search for the specific amounts located at HUD’s website.
FHA Non Traditional Tradelines – sometimes a borrower may not have a credit score or may not have any credit. FHA Non Traditional Tradelines are used in place of an empty credit report. Car insurance, rental history, phone bills, water bills, electric bills, and car payments are commonly used as some of the FHA required tradelines on borrowers with no credit scores.
FHA also offers FHA Secure for those who have had an ARM adjust, and have made payments AFTER the ARM adjusting. This FHA Secure program can help you lower your rate, and stop the ARM from adjusting.