FHA LOANS

FHA LOANS

What is a FHA Mortgage ?

A FHA mortgage is a real estate secured home loan that is insured by the Federal Housing Administration.

The Federal Housing Administration is a United States Governmental Agency that was established in 1934 to stabilize, systematize and improve the U.S. housing and mortgage markets.

The Federal Housing Administration, also known as the FHA is a part of The United States Governments' Housing and Urban Developments' (HUD) Office of Housing

The Federal Housing Administration is one of the largest mortgage insurers in the world; Insuring more than forty six million mortgages since they were established.

The Mortgage Insurance provided by FHA protects mortgage lenders from loss in the event a homeowner fails to make their mortgage payments and defaults on their mortgage.

As a result of the Mortgage Insurance provided by FHA, the down payment requirement for FHA home loans has been drastically reduced from the 50% requirement in 1934 to 3.5% today.

In addition FHA has had a large role in extending mortgage terms from the 1934 three to five year duration, to 30 years today.

Today's longer term mortgages are much more affordable and consumer friendly than the mortgages that existed prior to governmental systemization.

As you can see, FHA has played a major role in making home-ownership much more attainable for the majority of Americans.

In addition to single family homes, FHA also insures multi-family properties, apartment buildings, residential care facilities, and hospitals.

FHA Financing

Frequently Asked Questions

Is a FHA mortgage right for my scenario ?

  • FHA mortgage financing is available for homes-owner, and home-buyers, nationwide
  • FHA mortgage interest rates are very competitive as compared to other types of mortgage financing
  • FHA mortgage requirements are as liberal and inclusive as exists in the "Prime" mortgage market

What is the credit score requirement for a FHA Loan ?

  • The minimum credit score requirement for FHA mortgage financing is a credit score of: 500

What is the down payment requirement for a FHA Loan ?

The down payment requirement for a FHA loan:

  • with a credit score of 580 or higher, is 3.5% of the property sales price
  • with a credit score of 500 to 579, is 10% of the property sales price

What other costs can I expect with a FHA loan ?

In addition to the down payment requirement of a FHA mortgage of 3.5% of the sales price, all mortgage loans to include FHA loans, also have costs incurred to close or finalize the transaction. These costs are know as closing costs.

Closing Costs vary by location and jurisdiction, but in Maryland, DC & Virginia; closing costs average approximately 5% of the sales price of a home.

In total, A purchaser can expect to make a financial contribution of 8.5% of the sales price of a home in order to obtain and finalize a FHA mortgage loan transaction.

This being said, if the seller of a home decides to pay some costs on behalf of the purchaser, the purchasers out of pocket expense would be reduced to less than the 8.5% anticipated expense.

Closing Costs are comprised of:

  • Administrative Fees
  • Origination Fees
  • Appraisal Fee
  • Credit Report Fee
  • Flood Certification
  • Prepaid Expenses
  • Escrow Deposits
  • Title Fees
  • Governmental Fees

May I borrow the down payment and closing cost for a FHA loan ?

  • You may receive a "Gift" of funds, for 100% of the funds you need for down payment and closing cost
  • A "Gift" means the donor has no expectation of repayment

Acceptable donor sources of Gift Funds:

  • a relative
  • an employer
  • a Labor Union
  • a close friend
  • a Charitable Organization
  • a governmental agency or public entity that has a program providing home-ownership assistance

Does FHA allow the Seller to pay some costs for me ?

Yes, Interested Third Party contributions toward the home purchasers closing costs are allowed by FHA.

The maximum Interested Third Party contribution is 6% of the property sales price.

Interest Third Parties are defined as:

  • Home Seller
  • Real Estate Agent
  • Home Builder
  • Home Developer
  • Mortgage Company
  • Loan Officer
  • Other parties with an interest in the transaction

 

What income documentation does FHA financing require ?

If you are an employee who receives a W2. We will need copies of your:

  • Pay stubs covering a 30 day period
  • Most recent two years W2
  • All pages of you most recent two years federal tax returns

If you are self employed or receive a 1099 from your employer, we will need copies of your:

  • All pages of your most recent two years federal tax returns
  • A year to date profit and loss
  • A copy of your professional license (if applicable)
  • A letter from your Tax Preparer detailing the nature of your business (if applicable)

What asset documentation does FHA financing require ?

If you receive monthly statements:

  • All pages of your most recent 2 months: bank, investment account, and or retirement account  - statements

If you receive quarterly statements:

  • All pages of your most recent quarterly: bank, investment account, and or retirement account - statements 

Is identification required for FHA financing ?

Yes, be prepared to provide a copy of your:

  • Government issued Identification Card
  • Drivers License
  • Permanent Resident Alien Card
  • Temporary Protected Status Card

What is the FHA maximum loan amount ?

How do I obtain additional information about FHA loans ?

Please contact us using the option below that is most convenient for you:

  • for fastest response please call us at: 443-864-5200
  • send us an email

How do I move forward in obtaining a FHA mortgage ?

Please contact us using the option below that is most convenient for you:

  • for fastest response please call us at: 443-864-5200
  • send us an email