FHA Mortgage Loans: The Benefits

FHA Mortgage Loan

You may be able to afford the purchase of a home,
when you may have thought it wasn’t possible…

Benefits and Highlights of FHA:

Below I will attempt to point out the benefits of an FHA Mortgage loan compared to a Conforming loan.

If you are considering purchasing a home, FHA will allow you to put down as little as 3.5% of the purchase price, plus closing costs.  (Conforming loans generally require 5% down payment and the 5% must come from the borrowers own funds)

FHA will allow the 3.5% of the down payment to come in the form of a cash gift from a relative or other person with which a close friend with a clearly defined and documented interest in the borrower..

The gift may also not only cover the 3.5% down payment, it may also cover the closing costs.  (Conforming loans require the gift to be at least 20% of the purchase price in order for the borrower not to need 5% of the purchase price from their own funds)

What does FHA allow?

FHA allows the seller of the property to give the buyer up to 6% of the purchase price to cover closing costs with only 3.5% down payment. This may be used toward title fees or other closing costs and also to possibly buy down your interest rate. (Conforming loans will only allow 3% seller paid closing costs unless the down payment is a minimum of 10%)

 FHA may allow you to qualify with a debt to income ratio of up to and possibly over 50%. with only a 3.5% down payment if you can receive an automated underwriting approval. (Conforming loans will require a maximum debt to income ratio of only 41% unless you put 20% down payment)

FHA Mortgage will allow a non occupant co borrower to also purchase the home and be a borrower on the loan with you if additional income and/or assets  are needed to meet the qualifications. (Conforming loans will not generally allow this unless you can qualify per the debt to income ratio’s requirements by yourself.) FHA will allow us to not count any monthly obligations you may have for student loans if we can document these loans are deferred for at least 12 months. (Conforming loans will make us count all student loan payments regardless if they are deferred for 36 months or more)

FHA may allow you to qualify even if you had a bankruptcy at least 24 months since discharged for a chapter 7 and for a ch 13 bankruptcy filed and paid documented paid as agreed for only 12 months. (Conforming loans will require 48 months since bankruptcy was filed)

FHA may allow you to qualify if you had a prior foreclosure as long as the foreclosure was greater than 36 months ago. (Conforming loans will require a minimum of 60 months since foreclosure). FHA mortgages may also be assumable as long as the party assuming the mortgage can qualify per income, credit and down payment.  This is HUGE if/when the time comes when you want to sell your home and your mortgage is at an interest rate which is a historically low interest rate of the current environment.  This not only will give you a major advantage over other property owners selling their houses at that time allowing you to sell your home faster, you may also be able to get a higher sales price for your home.
(Conforming loans do not allow for any assumability)

FHA has a loan program which is a streamline refinance. If rates do happen to fall lower you may be able to refinance without getting another appraisal , without documenting your income at that time and still being able to qualify for the lower rate, if rates  do happen to go lower. 

If you are considering buying a home and you do not believe you may qualify, FHA may be just the right program designed to help you realize your dream of being a home owner.

Check out our fha mortgage rates!