Sunday, March 25, 2018

Getting A Mortgage Loan? Consider An FHA.

Pamela Madore
Pamela Madore Mortgage

Who Can Qualify For An FHA Mortgage? Consider an FHA.

Don't be fooled.  Many people think that you have to be low-income.  Others think you have to be a first-time homebuyer.  Neither are true.

An FHA loan is a federally insured loan.  FHA stands for Federal Housing Administration.  The loan does not come directly through FHA.  The loan is comes from a lender or bank. 

The connection is through mortgage insurance.  FHA mortgage insurance's acronym is MIP which is mortgage insurance premium.  The MIP is both an upfront premium that is allowed to be financed into the loan.  There is additionally a monthly premium that is part of your escrow account. (taxes, insurance, MIP)

Have questions?

In the event that the borrower defaults on the loan, the mortgage premium serves to offset the loss to the original lender. 

That is a simple version of how the program works.

So.  Who can qualify? 

The orginal lender has to follow FHA guidelines in order to obtain the FHA insurance.  So what are these guidelines?

Let's get rid of the idea that you have to have a low income.  That is simply not true.  You can make as much money as you want.  I suppose Warren Buffet could qualify for an FHA loan if he wanted to. :-)

Second, you can get an FHA loan even if you have had one before.  There are certain exceptions where you can have 2 FHA loans at the same time but as a rule, you need to pay off the first one before getting a second one.

An FHA loan requires a minimum of 3.5% as a down payment.   So, as an example, you would need a down payment of $7000 on a $200,000 house. 

There is a limit to the amount of money you can borrow.  This limit is set by FHA based on county.  The limit in Potter/Randall county is currently at $294,515 for a single family house or mobile home. The purchase price can be any amount.

FHA loans must be owner occupied.  Investors are excluded.  You can also buy a duplex, tri-plex or quadraplex as loan as you live in one unit.  The maxium mortgage amount on these are $377,075, $455,800 and $566,425 respectively.

The house must also meet FHA guidelines.  We often say that it must be safe, sound, and sanitary.  The most common reason that a house won't pass for FHA is on a house built before 1978 and has chipped or peeling paint.  Prior to 1978 some paint had lead in it and FHA find that to be a hazard.

You can also buy a double-wide mobile mobile home.  It has to be retro-fitted with an approved FHA foundation and have not been moved from one location to another.  It must have been new when placed on the site.

FHA credit scores and underwriting guidelines are a little more flexible than a conventional loan so it is very popular.  The interest rates are the same as normal interest rates on any other type of loan. 

Overall, FHA is an excellent choice for a mortgage.  You don't need a lot of money.  Your can get buy with a few credit dings.  And you can be very flexible on the type of property you buy.

For more information or to apply for an FHA loan,  contact me.   I would be happy to go over details of your situation and if for some reason you can't qualify today, I will help you prepare to become qualified.

Call today~!   Have an unusual situation?  Check here.

Pamela Madore
Pamela Madore Mortgage
3955 S. Soncy
Amarillo, TX 79119
NMLS 289635
NMLS 1560825

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