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 Making Dreams come true
with FHA Mortgages and 100% Financing
Some people believe it is too hard to get a loan nowadays. That is false.
The Federal Housing Authority (FHA) still provides 96.5% financing with up to 6% seller paid closing costs with scores as low as 640.* FHA will also accept a 5% gift .
* I even have lenders that will look at scores as low as 580 with certain circumstances.
First South Mortgage is a Full Eagle Lender which means we can look at your loan ourselves and underwrite "in-house" if we want to.
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Federal Housing Authority
FHA Purchases - FHA is the one of the most popular mortgage loan programs available today. 96.5% FHA financing requires 3.5% down payment. If you are receiving a gift from family member, you can obtain 95% FHA Financing. We have some amazing adjustable rate mortgages available with FHA as well. Using a 5/1 ARM might mean the difference between an affordable home payment and one that hurts a little bit.
Ask me about this. These programs are great First Time Home Buyer Loans.
You will receive the $8,000 credit when you do your taxes the following year. There are no programs available that provide the tax credit money up front for down payment. See Link Shipp funds are available in some areas but money is limited to certain income ranges and in some cases properties need to be in certain neighborhoods.
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Employment:
The most important strength of a file when obtaining financing is the job. FHA needs to see you in the same line of work for at least two years. If you are a self-employed individual, FHA wants to see you self employed for at least two years. It is O.K if you have recently switched positions as long as the move is for the better and in the same line of work. I will calculate your debt ratios to verify how much home you can buy. This is all part of the pre-approval process that should take place before you go shopping with a realtor.
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Credit Issues:
FHA allows for credit that is just beginning to develop. Usually an underwriter likes to see at least three trade lines paid on time for at least one year. In addition to credit listed on the credit report we can build alternate forms of credit. Examples of alternate forms of credit include:
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Rent - Pay it on time with a check
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Phone Bill - We can get a reference letter from the phone company
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Electric Bill - We can get a reference letter from the electric company
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Car insurance - Your agent will provide us a reference letter
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Buy here, pay here car dealerships
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Buy here pay here furniture stores
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Just because you have blemishes on your credit doesn't mean that you cannot get a loan!
If a debt appears on your credit report that is being paid by another individual, we prove this by showing 12 months cancelled checks. Related links:
ImprovingCredit
GettingYourCreditReport
DisputingCreditReports
MistakesonYourReport
DebtSettlement
Funds for Closing
FHA requires 3.5% down payment coming from your own funds. If you wish to receive a gift from a family member the amount required is 5%. Usually when we are structuring financing for individuals with limited funds, we structure the financing with seller paid closing costs. This limits the amount of money out of pocket needed for closing. Ask me about this. FHA allows for up to 6% seller paid closing costs but keep in mind the borrower (s) always need to come in with their own 3.5% in the transaction.
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Property
FHA will look at properties that are intend to be used as a primary residence. The FHA appraisal will scrutinize the property to ensure that the buyer is not buying a "lemon". If there is substantial work that needs to be done to make the property functional, FHA has a loan for that. At this point in time I even have a FHA construction loan.
For more information with regards to preparing yourself for homeownership, please see my video series entitled: First Time Homebuyers This is a video workshop consisting of eight segments that will provide more details as to the steps you need to take in order to get ready.
GettinganAppraisal
Please see below where I touch upon some other very aggressive low money down programs
USDA- USDA will allow for 100% financing in designated rural areas. Minimum 640 credit score. This program is no longer available for manufactured homes. The home needs to be in a rural area. Here is a lookup tool to see if the location qualifies. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
I have a page devoted to this program : Click Here
$100 Down Program - HUD will allow you to purchase an existing foreclosure for $100 down plus closing costs. Always remember to ask us about structuring the financing where we get the seller to pay some of your closing costs. This keeps even more of your money in your pocket that you can use for other things such as upgrades.
Fannie Mae Foreclosures - Fannie Mae has a program that allows for 97% financing without mortgage insurance on Fannie Mae held foreclosures. This is essentially FHA financing without the mortgage insurance. Fannie Mae foreclosures are everywhere and sometimes avoiding the mortgage insurance will save as much as $100 per month.
Let us help you explore all your mortgage options to get you the lowest mortgage payment with very little out of pocket. I look forward to helping you!
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More: Government Loan Programs
More FHA Information
http://www.fha.com/fha_article.cfm?id=80
The FHA issued a new policy on May 11, 2009 regarding the 2009 First Time Homebuyer's Tax Credit and down payments on FHA loans. For a time after the intitial press release from the Department of Housing and Urban Development, it appeared that home buyers interested in FHA mortgages could get a short-term "bridge loan" to let them take advantage of their 2009 First Time Homebuyer's Tax Credit. This would let FHA borrowers use the loan as a down payment on their homes. But since the initial May announcement, the rules have been revised again and much confusion was the result.
In short; the 2009 First Time Homebuyer's Tax Credit, known to some as the Obama Tax Credit or the Obama First Time Homebuyer's Tax Credit, lets those buying their first primary residence to get a tax break up to $8000. The tax break can only be claimed for purchases made in the 2009 tax year and is paid after the home buyer has filed an income tax return for 2009.
The first round of new FHA rules appeared to let banks offer bridge loans to borrowers so they could use their IRS money as a down payment on an FHA home loan. But further investigation into the rules uncovers a law forbidding banks from offering down payment assistance; these bridge loans could be interpreted as down payment assistance even though the loan is simply to cover the amount of an income tax refund the home buyer would get anyway.
Additional guidance was issued by the FHA at the end of May. The revised rules state FHA home loan applicants can still apply for these bridge loans, but the loans cannot be used to meet the FHA's minimum 3.5% down payment. The money can be used for other expenses or be paid on top of the required down payment; and putting an additional $8000 down on your FHA mortgage beyond the required 3.5% is a good thing. Imagine the reduced interest payments and the money saved over the lifetime of the loan. FHA loan applicants are also allowed to use the bridge loans to pay for closing costs, up front interest payments or other expenses related to closing the deal on an FHA home loan.
For FHA lenders and borrowers alike, May was a very confusing month, but the FHA seems to have sorted out the mess. The rules are clear now--bridge loans are permitted, but the FHA's required down payment must still come from the borrower's own funds. According to the Department of Housing and Urban Development's official site, FHA guidelines are designed to allow people interested in an FHA mortgage to cut their up front costs while requiring the borrower to have a personal investment in the property bought with an FHA home loan.
"In addition to the borrower's own cash investment," a press release at HUD.gov states, "FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time home buyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away."
For more information on how to apply for a bridge loan towards your expected 2009 First Time Homebuyer's Tax Credit, ask your FHA-approved lender to explain the process.
FHA Home Loans Growing in Spite of Housing Slump
http://www.fha.com/fha_article.cfm?id=85
With an estimated $290 billion in FHA loans projected for fiscal 2009, it's clear that while conventional lending markets are hurting the FHA is meeting a serious need for affordable home loans. According to recent press, FHA mortgages tripled in 2008; in 2009 the amounts are expected to be even higher. 2009 has seen 30 year rates on home loans drop to record lows, and homeowner bailout programs and housing stimulus plans have only made it more attractive to apply for an FHA mortgage.
Some of the most recent developments are the most helpful. First-time home buyers and home owners have heard plenty about the Obama mortgage, but the latest news is even better for many currently in the market for their first home. On May 29, U.S. Housing and Urban Development Secretary Shaun Donovan made it official; home buyers can use their 2009 First Time Home Buyer's Tax Credit (also known to some as the Obama tax credit) as a down payment on their FHA home loans.
This is done by monetizing the tax credit through a short-term bridge loan which is applied as a down payment on the FHA loan; the larger the down payment, the lower overall cost of buying that first home. According to the U.S. Department of Housing and Urban Development, FHA borrowers are now permitted to apply the 2009 tax credit to the down payment above and beyond 3.5 percent of the appraised value or the borrower's closing costs.
What's the advantage in doing so? FHA home loans already have low down payment requirements compared to conventional loans, but using the 2009 First Time Homebuyer's Tax Credit means FHA borrowers could achieve lower interest rates as a result, saving money over the lifetime of the loan.
These advances and pro-home owner incentives are part of the reason origination of FHA loans has skyrocketed in 2009; they're also the reason why HUD is requesting even more money for next year's expected flood of FHA loan applications. Another reason for the increased interest in FHA mortgages? Conventional loans are harder to come by. Credit requirements and other issues connected with conventional loans make the housing market even more competitive; FHA home loans with their lower down payments and more forgiving credit requirements offer greater opportunity to get into that first home even in a stressed-out economy.
The U.S. Department of Housing and Urban Development is requesting authority to use up to $400 billion dollars in 2010, the equivalent of more than $2 million in loans. Compare those figures with FHA loan numbers from previous years; in 2007 lending volume was at a mere $60 billion. The requested $400 billion in FHA loan money for 2010 makes the 2007 numbers look positively anemic.
Could Down Payment Assistance Programs Make a Comeback?
http://www.fha.com/fha_article.cfm?id=60
Down payment assistance programs were all the rage, once upon a time—until President George Bush sighed H.R. 3221, The Housing and Economic Recovery Act of 2008. Part of the act banned seller-funded down payment assistance programs such as AmeriDream, the Nehemiah program and others.
Down payment assistance programs allowed the seller and charitable organizations to contribute towards the closing costs and down payment of FHA loans. For first-time homebuyers, down payment assistance programs helped make getting that first home with an FHA loan even more affordable. When the law banning down payment assistance programs took effect on 1 October, 2008, many borrowers and lenders had to find other ways to reduce or mitigate closing costs and down payments. Now there are developments that could give hope for homeowners who want to purchase using an FHA guaranteed loan; a bill called the FHA Seller-Financed Downpayment Reform Act of 2009. This was introduced in January 2009 by Representative Al Green (D-TX) and 17 co-sponsors.
The bill is designed to, “revise the requirements for seller-financed downpayments (also known as SFDPA for short) for mortgages for single-family housing insured by the Secretary of Housing and Urban Development under title II of the National Housing Act,” according to OpenCongress.org.
There are pros and cons to reviving down payment assistance programs. Opponents of the 2009 FHA Seller-Financed Downpayment Reform Act say bringing back downpayment assistance programs like AmeriDream or GrantAmerica could potentially distort housing prices. According to one site which opposes the return of seller-financed downpayment assistance, “Usually the SFDPA money comes from simply marking up the home (sic) value.”
Those in favor of SFDPA programs point out that the FHA requires a 3.5% down payment as part of the terms of an FHA home mortgage. When down payment assistance programs are available, that down payment isn’t necessarily made by the borrower. Some down payment assistance programs even offer additional money to cut the costs further. The advantage to the cash-strapped buyer is obvious. Little or no downpayment means a smaller financial drain during the transition to becoming a homeowner.
Assuming the “marking up the home value” complaint is legitimate, the issue can be viewed from a different perspective. If a buyer knows in advance that getting a greatly reduced down payment means getting a markup to offset the down payment issue, seller financed down payment assistance becomes an option--IF the buyer is willing to accept the markup.
You could choose to pay the required FHA loan down payment in full, or opt to pay a bit more over the long run to make up for not having to put a larger amount of money down at closing. The real issue is being an informed borrower, reading the fine print, and knowing how your choices about making the down payment and how much could affect your bottom line overall. Choose a larger downpayment and lower FHA loan payments every month, or accept a higher monthly bill to avoid putting a drain on your bank account. It's the informed decision that counts.
For now, the “controversy” is moot—the 2009 FHA Seller-Financed Downpayment Reform Act has not been passed or rejected. Until changes to the law are passed by the federal government, down payment assistance programs are still banned; the programs active until October 2008 are over until new laws give them permission to return to business in some form.
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