Mel's Columbia, SC Blog: FHA Loans - A GREAT Financing Option for Your Home Purchase

Thursday, December 10, 2009

FHA Loans - A GREAT Financing Option for Your Home Purchase

Low home prices. Historic interest rates. Tax credits. Stimulus packages. Bailouts. There's a lot of chatter about how these factors affect the real estate market, but not enough talk about a no-brainer financing option... FHA Loans.

Key Points About FHA Loans:

The borrower must meet standard FHA credit qualifications (there's no set credit score barometer, but a borrower's debt-to-income ratio is heavily considered).

The borrower is able to finance the upfront mortgage insurance premium into the loan. The borrower will be responsible for paying an annual premium.

The FHA mortgage requires a low 3.5-percent down payment, and that money can come from a variety of sources, including parent gifts and HUD downpayment assistance grants.

Closing costs are also low - typically 3 percent of the total purchase price - and may be covered by the seller in today's market. They can also be incorporated into monthly payments.

Eligible properties are one-to-four unit structures, and each state has a purchase price limit (as high as $400,000) for FHA loans.

If a buyer finds a fixer-upper, the FHA 203(k) program can help the person purchase or refinance the property, with the cost of repairs and improvements included in the loan.

FHA home mortgages aren't just for first-time homebuyers. FHA refinance loans can help people get out of toxic debt situations caused by subprime mortgages with high interest rates.