Understanding FHA Home Loans

Understanding FHA Loan Fees

To correct a common misnomer, the Federal Housing Authority (FHA) does not make loans, it insures loans. This means that lenders are exposed to less risk when approving FHA insured loans for borrowers. For example, if the borrower stops payments on the loan, the lender can file a claim with FHA to recover some or all of the money.

Typically, FHA insured loans are attractive to first-time home buyers. For starters, they help make home ownership more attainable. They require only 3.5% down, of which up to 50% can be gifted from a family or friend.

Additional advantages to FHA insured loans include:

  • Flexible credit scores and income requirements.
  • Option to roll closing costs into the loan. Whiles most conventional loans require closing costs be paid for out of pocket, FHA allows the borrower to include closing costs into the loan as long as the borrower qualifies for the higher amount.
  • Higher debt-to-income ratios. FHA allows 41% of monthly debt to income; 29% mortgage payment to income. Conventional loans typically allow only 36% and 28%, respectively.

Disadvantages include:

  • Loan limits. One of FHA’s goals is to make home ownership more attainable for low- to moderate-income buyers, and, for this reason, FHA has established loan and income restrictions. Click the following link to look up FHA Mortgage Limits in your area.
  • Owner-Occupancy. Investors will not qualify for FHA insured loans; buyers are required to live in the property that they purchase for a specified duration.

Two additional points of consideration when applying for an FHA insured loans are minimum property requirements and additional processing time. The property must meet certain standards in order for the loan to be approved. Your real estate agent should be able to provide some guidance on whether or not the property may meet the requirements—but, of course, a FHA appraisal will provide the final determination.

Lastly, borrowers are required to provide additional information, which may, if they are not prepared, extend the loan processing time. However, lenders are much more efficient at processing FHA loans and should still be able to process and close loans within the typical 30 to 45-day period.


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FHA refinance question...

2010-10-31 14:55:18 by Withthenastydunk

I know this is something to ask my lender but still maybe somebody has Sunday insight.
So we purchased a home last year at about 5.75% on an FHA loan and I have seen that FHAs are now around 4% in Oregon.
So if we chose to refin would we have to go through all the paperwork, applications, appraisels and hassles even if we go through our existing lender, or is it much easier and actually worth it? We are not looking to do anymore than take advantage of the lower rates.
Thanks for any applicable insight.

FHA refinance questions

2008-06-17 10:31:53 by maggie_moo

So, I'm trying to get my FHA mortgage refinanced. The current situation is my aunt and uncle co-signed with me.
My lendor is telling me he's having problems refinancing because of my current credit situation (it stinks - it's in the 500's).
My aunt and uncle MUST get off the loan so that they can purchase a second home.
I thought that I could do a simple streamline re-fi.
Anyone have any suggestions?

You have to have a FHA loan currently to qualify

2009-01-06 20:31:23 by reodiva

FHA REFINANCE: STREAMLINED REFINANCING BASICS
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
In order to qualify for a Streamlined Refinance your original home loan must be an FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back

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30, 2013, the Federal Housing Administration placed strict limits on loan sizes and raised mortgage insurance premiums designed to encourage slow, steady home equity withdrawals. So don't automatically rule out reverse mortgage. It may fit your needs.

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The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Waterstone Mortgage Corporation. The views and opinions ..

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