This web site will help you understand FHA mortgage underwriting guidelines and
it will also help you determine if an FHA loan is right for your situation.
FHA loans have always been a good opportunity for home buyers, but there are some
things you should consider before you decide.
First, we need to understand what a FHA mortgage is and is not. The Federal
Housing Administration (FHA) does not lend money, plan, or build
housing. It is a division of the Department of Housing and Urban
Development. The Federal Housing Administration sets standards for
underwriting and construction, but its main purpose is to insure
residential mortgage loans made by individual/private lenders. The
basic intent was to provide FHA-insured loans to borrowers for their
primary residence.
FHA loans have always been a great alternative for
people who don't quite qualify for conventional financing. The
guidelines are more forgiving allowing for smaller down payments, higher
debt to income ratios, some credit issues, and more sources for the
down payment. The great thing is that the interest rate is only
slightly higher than a conventional loan. Sometimes the interest rate
is actually lower. Remember this! If
you go to a Mortgage Broker or a Bank and the rate quoted is exceptionally
higher, they are charging you too much. Call around for
quotes. You will usually get a better rate from a broker.
Advantages:
- FHA is not as strict on credit scoring.
- High debt to income ratios: 31% / 43%
- Minimum down payment is 3.5% (may be a gift from a relative)
- Seller, builder, or realtor can pay up to 6% of the sales price
towards the buyers closing costs, discount points, prepaids, and
up front
mortgage insurance premium.
- Buyer can finance closing costs into the loan, except for prepaids
and discount points.
- Credit criteria is not as strict as a conventional loan. In fact, you might qualify
if you have filed a chapter 13 bankruptcy and have been in it for at
least one year.
Disadvantages:
- FHA mortgage insurance may be more expensive than Conventional mortgage
insurance.
- Maximum loan amounts are lower than conventional loans and they are
determined by area.
This web site has a ton of information that will help you better
understand FHA loans. The guidelines are very complicated in some
areas so I could never include them all on this site. If there is
an area you have a question about just send me an email and I'll do my
best to find the answer for you. email
If you are interested in the guidelines for conventional loans you
should visit our other web site about mortgage
underwriting guidelines. That site talks about all types of loan
products and it has several Mortgage Calculators if you want to play around with the numbers.
http://www.mortgageunderwriters.com also covers Credit History, Credit
Repair and the Loan
Process.
HR 3221
HR 3221 eliminated FHA DPA (down payment assistance) as of Oct 2008,
while HR
6694 tried to re-instate it 'just in time'. Unfortunately it
has not passed yet. I'll keep you posted.
FHA Secure Refinance
The FHA Secure program can help home owners who are behind on their home mortgage and
facing foreclosure. This program allows the delinquent home owners to refinance their
ARMS (adjustable rate mortgages).
I have put together the underwriting guidelines for this program so you
can determine if you qualify or if you are in the industry, you can learn how it
works. FHA
Secure Mortgage Guidelines
Hope For Homeowners, H4H
This is a program developed to help homeowners stay in their homes and
prevent foreclosure. I'll let you decide if it really helps
anyone. I have put up the guidelines and given you the link to the
Mortgagee Letter so you too can have all the details. Honest, this
program is unbelievable! H4H
