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The most popular FHA home loan program
nationwide is the 203(b) FHA home loan that only requires a
minimum of 3% from the borrower and permits 100% of their money
needed to close to be a gift from a relative, non-profit
organization, or government
agency. The main advantage to a FHA home loan is that the credit
criteria for a borrower are not as strict as FNMA or FHLMC. Someone
who may have had a few credit problems should not have a problem
obtaining FHA financing. Also, FHA home loans are assumable,
allowing a person to take over the mortgage without the additional
cost of obtaining a new loan. In addition, the seller must pay for
part of the "traditional" closing costs (called non-allowable costs)
while a borrower's allowable costs can partially be wrapped into the
loan. 100% of the down payment and closing costs can be
gifted. The greatest disadvantage of FHA home loans is the upfront
mortgage insurance premium (MIP). On a 30 year FHA home loan that
equals to 2.25% of the loan amount (2% for a 15 year) in addition to
the 0.5% annual renewal premium that a borrower will pay for the
life of the loan. In addition, FHA limits the amount a borrower can
borrower. There are some credit
issues that we must allow for a certain time to pass before
you can qualify for a FHA loan. They are follows:
Two years from the date
of discharge for a bankruptcy Three years from the date of
foreclosure ADVANTAGES OF FHA
Loans
FHA Loan
Lower required down
payment
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