The FHA Home Loan Program

With HUD/FHA (Federal Housing Administration) gaining market share in the mortgage industry because of its low down payment and low-interest rates, this program is becoming more popular with homebuyers. FHA home loans offer program options for first-time homebuyers with limited funds for a down payment as well as individuals with less than perfect credit that has had a previous short sale, foreclosure or bankruptcy. Looking to see if you are eligible to purchase a home utilizing the FHA home loan program, let's get started right away and explore the benefits.

The FHA program has 4 popular loan programs:

1. Standard 3.5% Down Payment: has a comfortable down payment of 3.5% of the purchase price which can be gifted by a family and the seller if elects to can pay up to 6% of the buyer's closing cost 
2. FHA 203k Streamline Rehabilitation loan: Purchase a home that needs upgrades, fix or replace ac/heater unit, roof, kitchen, bath, carpet, paint and other approved repairs (up to $35,000)
3. HUD own properties: Looking to purchase a HUD home through an approved Realtor® go to http://hudhomestore.com
4. Energy Efficient Mortgage (EEM): Up to 5% of the appraised value towards energy efficient upgrades using FHA or VA* financing. Upgrade windows, heating/air conditioning units, etc

What is an FHA Home Loan?

FHA Home Loans are a government-backed mortgage that takes the risk off of lenders in order to provide lower rates to a home buyer. This program is most attractive to first-time homebuyers, but also allows individuals without FHA mortgages already to participate. Down payments for FHA home loans can be as low 3.5% the total sales price, much lower than a conventional mortgage would be. Using gifts from outside parties are less restricted than conventional mortgages towards closing costs and down payment. There is no penalty for prepayment and if you plan on selling the home. There are also other sub-programs that benefit towards home remodels and renovations, such as 203k or the Energy Efficient Mortgage. Although FHA home loans might not be for every homeowner in California, it is an attractive program to a majority of first time home buyers or buyers that may not be able to qualify with other home loan programs. This government-backed loan was initiated to make homeownership an easy goal for Americans trying to find a new home.

Restrictions on FHA Home Loan Programs:

There are a couple of requirements and rules to follow when it comes to owning a home under the FHA Home Loan Program. They are:

• In general, a minimum middle FICO credit score of 600 is required (each mortgage lender will set their minimum credit score requirements)
• There are limits to the amount a loan can be for by county, these limits can be found at the HUD website, here
• A 1.75% upfront mortgage insurance premium is required to fund the loan, as well as ongoing monthly payments towards insurance which is determined on the amount of the down payment

These rules may not fit everyone, but they will be beneficial to first time home buyers that need a little help financing their primary home in California.

Get an FHA Home Loan Quote Today:

If you are unsure of these requirements and are looking for an FHA home loan, there really is no better way to go than calling me at 909-503-5600. Contact us via e-mail at nrufty@canopymortgage.com or by phone at 909-503-5600 today and I welcome the opportunity to help answer any questions and tailor fit this program to work within your budget.