What Is An FHA Mortgage?
FHA provides mortgage insurance for first time homebuyers on home loans made by FHA-approved lenders throughout the United States including Washington State. FHA is an acronym for Federal Housing Administration and was established in 1934 by Congress and later became a part of the Department of housing and Urban Development (HUD) in 1965. FHA insures a wide variety of home mortgage loans including multifamily and single family homes, manufactured homes, hospitals and is the largest insurer of home mortgage loans in the world.
FHA home loans were originally created due to the extreme decline of the housing market in which only 40% of the nations families were homeowners and over 2 million construction workers had lost their jobs. At the time it was much too difficult for the average first time buyer to meet the stringent home loan terms. FHA home loans were used heavily during the 1940's to assist military families and first time home buyers in purchasing real estate after returning home from the war. Through the 1950's, 60's and the 70's the FHA helped boost the production of millions of privately owned apartments for lower income first time buyers, handicapped, and elderly citizens. With the assistance of FHA home loans the nation had reached an all time high 68.1% home ownership rate by the 3rd quarter in 2001.
Since its inception, the FHA and HUD have insured over 34 million home mortgage loans and currently has approximately 4.8 million single family home mortgage loans. Because of FHA home loans more manageable terms, and guidelines it has heavily contributed to making the United States the best housed Nation in the world.
With the benefits of lower down payments and more flexibility when calculating household income and debt ratios FHA home loans have what is called mortgage insurance. The FHA Mortgage Insurance helps protect lenders against defaults and foreclosures. One of the biggest benefits to the American People is that even though FHA home loans are a Government agency all of it's income is produced within itself and does not require tax payers money. PrimeLending is a full service FHA home loan approved lender servicing first time buyers in areas including Seattle, Tacoma, Everett, Spokane, Olympia, Puyallup, Bremerton and all other areas of Washington State.
Basic FHA Mortgage Guidelines
Unlike conventional loans, FHA home loans allow for much more flexibility when approving a potential first time buyer. FHA home loans allow for less than perfect credit, lower qualifying scores, higher DTI ratings (debt to ratio), and smaller down payments which is perfect for most first time buyers. Currently a potential first time buyer here in Washington State can be eligible to purchase a loan with only 3.5% down. (To learn more Contact Me today for more information about your individual situation.) In addition, first time buyers and repeat buyers can be quite creative when deciding how to come up with the funds for the down payment of their FHA home loan. The funds can come from either a gift from family or friends or through a down payment assistance program offered by many counties and cities throughout Washington State including the cities of Lakewood and Tacoma as well as Pierce County. For more information about first time buyer programs such as down payment assistance please see below.
FHA Streamline Mortgage Refinance
For those who already have an FHA home loan and are looking to refinance to a lower rate the FHA has set up a program specific to FHA borrowers called the FHA Streamline. This program is designed to help current FHA borrowers lower their interest rate without the hastle or cost of getting an appraisal. Since home values have been declining all around the country including here in Washington State, the FHA Streamline program is of great benefit. As long as the homeowner has not been late on any mortgage payments in the last 12 months, meets other program requirements and will see a measurable improvement from their current mortgage they may qualify to reduce the interest rate of their FHA home loan. For qualified FHA homeowners the declining market will not prevent them from refinancing to lower interest rates. To learn more about FHA Streamline Refinancing or to see if you are qualified Contact Me today.
FHA 203K Rehab Mortgage Loans
Today's market presents many amazing opportunities for potential investors and first time buyers particularly in the form of short sales and bank owned properties. Many investors and savvy shoppers have learned that these homes can often be in less than perfect condition and may need some much needed attention. However, you can't let that stop you from taking advantage of some of the best buying opportunities in many years. Once again FHA has the answer and it's called the FHA 203K Rehab Loan. The FHA 203K rehab loan is a specially designed home loan that provides the potential buyer the following advantages:
- Allows repair/renovation costs to be rolled into the loan
- Major items ARE allowed (Foundation)
- Low down payment (3.5%) and seller can pay up to 6% towards closing costs
- Close before repair/rehab begins
- Only one closing. Money disbursed on a draw basis after closing as construction is completed
- Buyer can include optional renovations/upgrades.
The FHA 203K Rehab Loan allows for many different types of improvements however, not all improvements are allowed. To learn more about the FHA 203k Rehab loan Contact Me today. With the FHA 203K Rehab Loan you will be able to find the real estate deal of your dreams and we can help you get it done.
FHA $100 Down Mortgage Program
How would you like to buy a home with only $100? Well, you can with another great program offered by the FHA called the FHA $100 Down Program. Unfortunately, from time to time FHA homeowners go through the difficult time of foreclosure and HUD will take the home back into their possession. When this occurs FHA will sell off the property "as is" for a truly great deal. In this circumstance the FHA will allow qualified buyers to purchase the HUD owned home "as is" with only $100 down instead of the FHA standard of 3.5%! All other qualifying factors remain in existence and the same standard FHA guidelines still apply. Contact Me today to learn more about this amazing FHA program and see if you are qualified.
Down Payment Assistance Programs For FHA Mortgages
As mentioned before FHA allows potential first time home buyers to acquire funds for the down payment either as a gift from a family member or friend or from approved down payment assistance programs. Some examples of government organizations that offer these down payment assistance programs are the City of Tacoma, City of Lakewood and Pierce County. Although each program can vary many of them are no interest no payment loans that will last 15 or more years before requiring any form of payment. Unless the property is sold and then the monies are owed upon the sale of the home. Pierce County down payment assistance for example is a 30 yrs no interest no payment loan while the City of Tacoma down payment assistance program is for 30 yrs with no interest and no payments. These programs can and do change at any time without notice so Contact Me today to learn more or see if you qualify.
