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FHA Underwriting Guidelines

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:

  1. FHA is not as strict on credit scoring.
  2. High debt to income ratios: 31% / 43%
  3. Minimum down payment is 3.5%  (may be a gift from a relative)
  4. 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.
  5. Buyer can finance closing costs into the loan, except for prepaids and discount points.
  6. 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:

  1. FHA mortgage insurance may be more expensive than Conventional mortgage insurance.
  2. 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

 

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