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What is the Federal Housing Administration?

The Federal Housing Administration (FHA) was created by the National Housing Act of 1934. Its intent was to regulate the terms of mortgages that it insured and increase the number of people who could afford a down payment and monthly mortgage payments. This also accomplished the goal of increasing the size of the market for homeownership.

FHA Guidelines

As with conventional loans, to secure an FHA loan you must meet basic income to debt ratio requirements, be able to verify your income and assets, liabilities, and credit history. However, these qualifications are likely to be more flexible with an FHA insured loan than the conventional loans offered today.

Debt to Income Ratios:

• 31% PITI – Your mortgage payment (Principal, Interest, Property Taxes and Property Insurance) should be no more than 31% of your gross monthly income.
• 43% Total Debt – Your total monthly debt including the mortgage; credit cards; auto loans; student loans; etc. should be no more than 43% of your monthly income.

Appraisal

• The FHA requires a physical home appraisal (except in the case of streamlined refinancing)

FHA Credit History Guidelines

The following general credit guidelines apply:

• Home purchase or refinance allowed just two years after a bankruptcy
• Home purchase or refinance allowed just three years after a foreclosure

Other General Guidelines

• Down payments as low as 3% of purchase price
• Refinance with as little as 5% equity
• More flexibility in calculating household income and payment ratios.
• FHA-regulated closing costs
• Up to $7,500 Tax Credit (First time home buyers are eligible until 6-30-2009; check with your tax preparer for details.)

FHA New Loan Limits

The Economic Stimulus Act of 2008 (http://www.hud.gov/offices/hsg/sfh/lender/sfhmolin.cfm) went into effect as of March 6, 2008 and allowed the FHA to increase loan limits for new purchases and refinancing through the FHA.

• The FHA loan maximum limit was increased from $362,790 up to $729,750.
• New limits vary by the geographic location of the home you are trying to purchase. The maximum of $729,750 applies to large metropolitan areas where the cost of living and homeownership is higher.
• Nearly 240,000 more homeowners and potential buyers may be helped by the new loan maximums.

Is An FHA Loan Right for Me?

RatesLower may be able to put the benefit of an FHA loan to work for you if:

• New Home Purchase:
  • You’re a first-time homebuyer
  • You haven’t owned a home recently
• Refinancing:
  • You would like to get cash out of your home
  • You need to lower your payment, but don’t have a lot of equity
  • You need to refinance to protect your investment
• Qualifying Concerns:
  • You don’t have a lot of money for a down payment
  • Your credit is less than perfect
  • You’re self-employed

NEW HOME PURCHASE

Let an FHA mortgage help you buy your Dream Home.

FHA mortgages are an attractive option for many homebuyers; allowing for a down payment as low as 3%. However, you don’t need to be a first-time buyer to take out an FHA mortgage or to take advantage of the many benefits afforded by government insured financing program.

New Purchase FHA Benefits

• Allowed 2 years after bankruptcy
• Down payments as low as 3%
• Allowed 3 three years after foreclosure
• Up to $7,500 Tax Credit (First time home buyers, those who have not owned a home within the last 3 years, are eligible until 6-30-2009. Consult a tax professional for details.)
• FHA-regulated closing costs
• Federally Insured

REFINANCING

FHA Refinancing: Lower your interest rate, finance a big purchase, pay off debt, or simply give yourself some peace of mind, with FHA Refinancing.

Maybe you are looking to help pay for college, consolidate bills, take a much needed vacation, or make home improvements. Maybe you have an adjustable rate loan that is adjusting upwards and would like to lower your rate. FHA Refinancing provides federally insured home loans that offer the flexibility and opportunity to make your financial life better.

FHA CASH OUT REFINANCING

• Tap your equity with Cash Out refinancing with as little as 5% equity. If your home was purchased more than one year prior to the refinance, you can refinance the existing mortgage for up to 95% of the appraised value.

FHA LOWER RATE REFINANCING

• Lower your payment and reduce the interest rate on your current home loan. Home owners with current FHA loans in good standing may further qualify for streamlined refinancing with less paperwork, and oftentimes without an appraisal.

QUALIFYING CONCERNS

Don’t let qualifying concerns stop you from buying your dream home. FHA Home Loans can help many buyers who may not qualify for conventional loan due to less than perfect credit.

• Home purchase or refinance allowed just two years after a bankruptcy
• Home purchase or refinance allowed just three years after a foreclosure