| FHA (Federal Housing Administration) loans are really a | | | | on top of that, will let them gift the buyers the minimum |
| hot product right now. Mortgage companies and | | | | required 3% investment through a down payment |
| brokers are scrambling to become approved FHA | | | | assistance program. So you see, you can get into a |
| lenders left and right. However, FHA loans have been | | | | house with little or no money if you qualify for an FHA |
| around for a long time, helping a lot of people get into | | | | loan. |
| homes. Some people say it's become the new "sub | | | | Another great thing about FHA? It doesn't have any |
| prime" loan. What that really means is that if you can't | | | | major pricing hits for a minimum qualifying credit score |
| qualify for a conventional loan, FHA's guidelines are | | | | of 620. In the conventional loan world, there typically |
| more flexible than some loan products. And because | | | | are pricing increases for loans every corresponding 19 |
| of this point, the FHA loan fits a lot of people's needs | | | | point increase in credit score. Most secondary lenders |
| and goals. | | | | who offer FHA loans will only give you a pricing hit if |
| When should you consider an FHA loan? One great fit | | | | you dip below a 620 credit score. |
| for an FHA loan is if you are buying a property and | | | | And what if you have a credit score below 620? If |
| are looking to put as little money down on the property | | | | you don't get an automatic underwriting approval, you |
| as possible. I had one couple that had plenty of money | | | | can possibly obtain a manual approval. What's a |
| and excellent credit, but the seller of the property they | | | | manual approval? It's when a real live human being |
| were buying was conceding "nada", and all the funds | | | | looks at your file, and considers actors other than your |
| for closing were being footed by this couple out of | | | | credit score to qualify you. You may have to show |
| their own check book. They were retired and | | | | you've paid other bills that don't appear on your credit |
| relocating. Their goal was to spend as little money as | | | | report on time for the past year. These types of bills |
| possible, but still get into the home they desired. FHA fit | | | | would perhaps be your cell phone bill, utility bill, rent, or |
| their needs perfectly, because they were able to | | | | car insurance premium. Couple this evidence with a |
| finance 97.75% of the loan amount. Their rate was | | | | strong, hard explanation of why your credit score is |
| competitive and their mortgage insurance was | | | | less than perfect, and you still have a good chance of |
| reduced. Also, they had plenty of money left over to | | | | loan approval. But, be aware that your minimum credit |
| buy plane tickets to visit the grandkids. Be aware, | | | | score must typically be a 580 or higher. |
| however, there is a loan limit for the FHA loan, so not | | | | Another nice fit for an FHA loan? Manufactured |
| all properties will qualify. But the limit is pretty generous. | | | | homes. You can still obtain an FHA loan to buy a new |
| Many times people have very little cash to put down | | | | or refinance an existing manufactured home. Of |
| on the property, but they have very nice credit. Again, | | | | course, there are stringent guidelines regarding the |
| FHA fits their needs greatly. Since FHA can pretty | | | | property that must be met, but FHA is still in the |
| much offer the lowest cash necessary to close | | | | manufactured home market. In fact, it's one of the few |
| available to many, it's easier for a buyer to negotiate | | | | product types offered on the secondary market that |
| for the seller to make a concession to lower or even | | | | still will endorse a manufactured home loan. The VA |
| eliminate the buyer's cash out of pocket. Naturally, the | | | | will too. |
| seller has to be ok with what they are netting from the | | | | So, if one of the above mentioned situations reflects |
| sale of the property. And the lender will make sure the | | | | your scenario, make sure you investigate your options |
| house is worth the contract price. But FHA allows the | | | | with FHA financing. You won't be sorry you did. You |
| seller to pay up to 6% of the buyer's closing costs and | | | | know what they say? If the shoe fits - wear it. |