Wednesday, December 28, 2011

An FHA Loan Can Sometimes Be A Good Option

In a market of rules and restrictions it is nice to have a loan available to clients that do not fit into an every day conventional box. FHA is that loan. With low down payment options and more flexible guidelines, FHA is helping get new buyers into homes every day. Without FHA our housing market would be 12 times worse off.

The Basics of FHA
1) Only 3.5% down and with special grant programs as little as .5% down. Yes, 1/2% down with special grants. You can buy a $400,000 house with only $2000 down
2) Seller concessions up to 6%
Which means when you buy that $400,000 house you can get the seller to pay all your closing costs so that seriously you are only bringing $2k to the pot if you have a grant program or $14,000 if you do straight old FHA
3) Debt to income as high as 55% on the back end. That means that your housing payments + credit payments can be as much as 55% of your pre tax income. With a conventional loan where you are putting down 20% the maximum back end is 50% in special circumstances but generally caps off at 45%.
4) Credit not that great? No problem. As long as you can squeak by with a 580 (most lenders require 640) you are good. Foreclosure 3 years ago? No problem, FHA is for you.
5) No reserves Required: If all you have is that 14k for that $400,000 house that is A OK with FHA

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