What are the seven things you should know about FHA financing? Let’s take a look.
The number 1 thing you should know about FHA financing is that FHA loans only require 3.5% down payment. That means that it becomes much more affordable for those of you who may not have a lot of money saved up for your down payment
The number two thing you should know about FHA Loans is that you do not need to be a first-time home buyer in order to utilize FHA financing. You should be aware though that there is a limitation on how many FHA loans you can have at a time
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Number 3
FHA loans are very forgiving with their guidelines and that includes having lower credit score requirements. The minimum credit score that is allowed will vary from lender to lender, but it is possible to obtain FHA financing with a credit score as low as 500
Number 4
And speaking of being very forgiving, FHA does have shorter waiting periods for what is considered to be major derogatory events such as bankruptcies, foreclosures and short sales.
Let’s take a look at those
Chapter 7 bankruptcy
There is a three year waiting period from the date of discharge.
Chapter 13 bankruptcy
Yo ave two options. Either prove that you made 12 monthly payments to the court on time and get the court’s permission to proceed or if it’s already been discharged at the time of application, there is no waiting period
Foreclosures
A 3-year waiting period from the completion of the foreclosure will apply.
Short sales
These work a little differently. They also have a waiting period of three years from completion but if your credit report shows that you are not late payments on the mortgage or on any other installment debt, then there is no waiting period and you can proceed immediately.
The number five thing you should know about FHA loans
You are eligible to use a, FHA Streamline Refinance. A streamline refinance does not require that you have an appraisal done. It also does not require that you qualify for the loan again when it comes to a debt to income ratio. So that makes it easier for you to take advantage of lower interest rates if they are available
Number 6
This one is a little bit of a bummer. The monthly mortgage insurance on FHA loans stays on the loan for the life of the
loan unless you put 10% down when you first purchase your property. The only way to remove mortgage insurance if you did not do 10% down would be to refinance out of that FHA loan into a conventional loan or other type of financing.
The number seven thing you should know about FHA financing
This one s also a bit of a bummer. If you’re trying to use FHA for purchasing of a condo, the condominium is going to have to be FHA approved. FHA has recently made it easier for projects and individual units to get approved. The hope is that the new process will make it easier to finance more properties using FHA loans. If you’re interested in a condo with FHA financing check with your real estate agent or a local lender or of course me.
There you have it, a quick look at the seven things you should know about FHA financing.
If you have any questions about this or any other mortgage or real estate related topic reach out to me.
You can send me an email at Laura@lauraborja.com
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