FHA Loans

FHA Loans

FHA loans are an attractive option, especially for first-time homeowners. They offer Low Down payment options as well as lower credit scores.

FHA STREAMLINE REFINANCE

An FHA Streamline refinance is a great option for Homeowners who do not have enough equity for a conventional loan, but would like to lower their interest rate. This requires NO Appraisal and limited documentation.

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The federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.  Typically the borrower can be approved with 3.5% down vs 20% that is required on other loan programs.

FHA loans are ideal for borrowers with little cash saved up for a down payment, and those who have less-than-ideal credit and cannot qualify for a conventional loan. FHA loans tend to be popular with first-time home buyers, as well as those with low to moderate incomes. Repeat buyers can get an FHA loan, too, as long as they use it to buy a primary residence.

Some of the FHA Lender guidelines are as follows:

  • Borrowers must make a down payment of at least 3.5 percent of the purchase price.
  • Down payment can come from a verified gift from a relative or government program.
  • A minimum FICO score of 500 to 579 with 10 percent down, and 580 or higher with 3.5 percent down.
  • Steady employment history or worked for the same employer for at least two years.
  • Borrowers’ income must be verified through pay stubs, federal tax returns and bank statements.
  • Loan must be used for a primary residence only.
  • Property must be appraised by an FHA-approved appraiser and meet HUD property guidelines.

Closing Costs for FHA Loans

HUD limits how much FHA lenders can charge in closing costs to no more than 3 percent to 5 percent of the loan amount. The total for closing costs will vary based on the state you live in, the size of your loan and whether you pay points to lower the interest rate.

The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as for an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an incentive for the borrower to buy a new home.

Lenders typically charge more interest on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to decide which option is best for them.

How can we help?

With Barbara Kenton at Allianz Mortgage Service, we know all about the FHA Mortgages and how to qualify you for a Loan.  If you are located in the Orange County area, Huntington Beach, Anaheim, Garden Grove, Cypress or anywhere in California, contact us today to get started.

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