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Purchase Money

FHA loans are not solely for first time home buyers. FHA loans are available for 1st or 2nd time home buyers, and existing homeowners. FHA home loans can be used for both purchases or FHA refinance transactions. Also, FHA mortgage loans does not have restrictions on income or locations. However, FHA does have maximum mortgage loan limits that are different per county.

FHA loan financing is available up to 96.5% of the purchase price for one to four family owner occupied properties. The down payment used to be at 3%, and has now been raised to 3.5%. Down Payment Assistance DPA from Nehemiah, Ameridream, and Genesis have also been terminated by the US government. These programs will cease on September 30th, 2008. Seller can still pay up to 6% of the buyer’s closing costs. Seller paid closing costs does not require help from any DPA programs. FHA loan rates are very competitive, and sometimes can be lower than your normal conventional loan.

FHA loans also have flexible credit guidelines for those with low scores or bad credit histories.
Bankruptcy Chapter 7 – 24 months from discharged date.
Bankruptcy Chapter 13 – 12 months from the date of filing. Must receive Trustee approval if still making BK payments. Will require at least 12 months of on time payments of mortgage AND Bankruptcy.
Foreclosure - 36 months from the date of discharge.
Collections – Typically, at least 24 months old, and may not have to paid off.
Medical Collections – Does not have to be paid.
Judgements – All judgements have to be paid and/or satisfied. Must provide proof of satisfaction.
Recent Credit History – FHA requires a strong 12 month history of no credit tardiness. Some lates maybe accepted if there are compensating factors. This is also subject to FHA underwriting approval.
Rental History – a 12 rental history maybe used to determine payment shock.
Nontraditional tradelines – If there is no credit history or no credit score then the borrower may use the following to help determine an approval:  Car insurance, rental history, phone bills, water bills, electric bills, and car payments. Most FHA lenders require at least 3 tradelines, and may or may not include rental history.