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Wondering how much your mortgage will be? Use our calculators to perform mortgage-related calculations such as your expected monthly payments.
FHA Loans
An FHA Loan (Federal Housing Administration) has some advantages over conventional loans. Since the government insures FHA loans, they generally have more lenient qualification requirements, lower down-payment requirements, and they are assumable loans. The maximum loan amount for an FHA loan (single-family) ranges depending on the county where you live. You can contact us for these maximum amounts for your specific county. FHA loans for purchases currently require a 3.5% down payment. Underwriting guidelines, employment history and credit score requirements are more lenient than conventional loans. Most lenders require a 640 credit score for FHA but we can go as low as 620 on a case by case basis. Go to http://www.hud.gov for more information on FHA and other government loan options.
What is the FHA loan limit?
FHA loan limits vary throughout the country, from $270,072 in low-cost areas to $623,000 in high-cost areas. The loan maximums for multi-unit homes are higher than those for single units and also vary by area. Because these maximums are linked to the conforming loan limit and average area home prices, FHA loan limits are periodically subject to change. Ask your lender for details and confirmation of current limits. In the more than 60 years since inception of the FHA, a great deal has changed and Americans are now arguably the best housed people in the world. FHA has contributed substantially to that achievement. Today, FHA is particularly important to minority and first-time homebuyers.
What is the debt-to-income ratio for FHA loans?
Most FHA lenders will allow higher debt to income ratios than on convention products. Many lenders will allow a debt to income ratio up to 50%. This depends on certain compensating factors such as credi scores, reserves & employment longevity.
FHA Mortgage Insurance
FHA requires a mortgage insurance premium (MIP) for its home buying programs. An up-front premium of 1% of the loan amount is paid at closing and can be financed into the mortgage amount. In addition, there is a monthly MIP amount included in the PITI.
Down Payment Gifts
The down payment can be 100% gift funds. This is one of the key benefits to the FHA program. Verification of the source of gift money is required and has to come from an acceptable source. It is necessary that the gift funds be deposited in the borrower's bank or savings account, or in an escrow account, prior to underwriting approval. Proof of deposit is required. Gift donors are restricted primarily to a relative of the borrower. They can also be certain organizations, such as a labor union or charitable organization. Contact your local branch for complete information.
Bankruptcy and Foreclosure
A credit report will be obtained on the borrower and any lates, collections, judgments, foreclosures, bankruptcies, etc. must have a justifiable explanation in writing by the borrower. In the event of a foreclosure, the borrower has three years from the date the claim was paid until he/she is eligible for another FHA loan, unless the foreclosure was the result of extenuating circumstances beyond the borrower's control and the borrower has since established good credit.
Chapter 7 bankruptcy requires the borrower to wait at least two years from the date of discharge.
Chapter 13 bankruptcy requires the borrower to have been paying on the bankruptcy for at least one year, performance must have been satisfactory and the borrower must also receive court approval to enter into the mortgage transaction.