FHA Purchase Loans
Many people think that FHA loans are only for first time home buyers. In reality, all US citizens and permanent resident aliens are eligible for FHA loans, even if they have owned a home before. There is no limit to the number of times you can utilize the benefits of the FHA loan program.
FHA loans are a great tool to purchase a home. They allow you to buy a home with as little as 3.5% down. Many times, you can even get the seller to pay some or all of your closing costs. This means you don’t need to save a large down payment in order to buy a home. If you currently rent, you can often times roll over your security deposit and next month’s rent payment into a down payment to buy a home. If that’s not an option, the FHA allows you to receive a gift from a family member or employer to use as a down payment.
Who qualifies for an FHA loan?
Credit: FHA loans offer an easier approval process than other types of loans. The FHA understands that people sometimes make mistakes. Even if you have had past credit problems, you may qualify for a new FHA loan. Prior late payments, bankruptcies, and even foreclosures are permitted, as long as you have subsequently established positive credit. Only a 580 credit score is required to qualify for a new FHA loan.
Income: The FHA does not have any minimum or maximum income requirements. They do require that no more than 31% of your monthly gross income goes towards your mortgage payment and no more than 43% of your income goes to pay all of your monthly debts. Don’t worry if you don’t know how to calculate this or if you are concerned that you are over these ratios. A loan officer can help guide you through the process and many times, we can approve you for a loan even if you exceed the FHA guidelines as long as you have some compensating factors.
Assets: The FHA requires that you put at least 3.5% down on a new home. These funds can be from your personal funds or can be a gift from a family member. In most instances, the FHA does not require that you have any reserves after closing. Any closing costs can be paid by the seller by using a seller credit, or you can pay them yourself.
Property: Most single family, condos, planned urban developments (PUD), townhouses, and even manufactured homes qualify for FHA financing.
Why use an FHA loan?
Small Down Payment: An FHA loan is a great tool for borrowers with a small down payment
Limited Credit History: If you only have a few pieces of credit, the FHA is a great option.
Prior Credit Problems: If you have had some issues in the past that you have resolved, the FHA understands.
Great Refinance Options: Once you are into an FHA loan, you have the option of lowering your rate with world’s easiest refinance, the streamline refinance. This program gives you the option of lowering your rate to the lowest market rate every time rates drop without having to re-qualify.
Government Guaranteed: Since the loan is insured by the FHA, the mortgage servicer is required to originate and service the loan according to FHA’s strict standards. The FHA wants to protect it’s consumers.
How Do I Get Started?
Please contact a loan specialist immediately to get the process started. We can provide you with a no-cost, no-obligation, pre-approval and closing cost estimate! There are 3 ways to do this:
- Call us toll free at 800-955-8965
- Fill out our contact form
- Chat live with a loan officer now
There are a few documents we need you to collect to process your loan. Do not worry if you cannot locate all of the documents, we should be able to help you. We will need:
- Drivers License
- 2 Year’s W-2s
- 30 Day’s Paystubs
- 2 Month’s recent Bank Statements
- Homeowners Insurance Declaration Page or Agent’s contact info
- Purchase Contract (If you are already under contract)
- Copy of Deposit Check (If you are already under contract)