In an attempt to stimulate the economy during the Great Depression, The United States Department of Housing and Urban Development (HUD) created the Federal Housing Administration (FHA). The purpose of this new entity was to increase the production of new homes, decrease unemployment, and to run insurance programs. To this day, FHA is making it easier for homebuyers to get into the property of their dreams with a comfortable home mortgage.
Here are some features of an FHA loan:
* Down payment requirement of 3.5%: This is one of the most attractive aspects of the FHA loan. And nearly all of the closing costs and fees can be rolled into the loan.
* Credit not as big of an issue: Because FHA loans are insured by the government, the credit requirements are not as strict as on conventional loans. But the interest rates are very competitive.
* Ability to buy a “fixer”: If you want to buy a home that needs lots of TLC, the FHA 203K loan can finance the purchase price of the home, as well as all of the costs of the repairs. And for current homeowners who wish to remodel, they can refinance their existing debt plus the cost of improvements all into one new loan.
* Equity conversion for seniors: People age 62 or older who live in their home and either own it free and clear, or have a low principal balance may be able to take advantage of the FHA Reverse Mortgage.
* Manufactured/Mobile Homes: There are two appropriate FHA loan programs.
Here are some of the qualification terms:
* Must be steadily employed for two years, with increasing income. It is best if those entire two years were spent at the same job.
* Property must be owner-occupied.
* Borrower may not have another FHA loan at the same time.
* Any bankruptcy must be two years old, with no negative credit reporting since.
* Any foreclosure must be three years old, with no negative credit reporting since.
* Your monthly mortgage payment for your new loan should not exceed 30% of gross income.
FHA loans are not only for first-time buyers, although they are very appropriate for this segment of consumers. If you think an FHA loan may be the right option for you, don’t hesitate to contact your San Diego mortgage specialist.
Christopher Muckley writes about San Diego mortgage, real estate, music and more.