FHA Loans

FHA pic
An FHA (Federal Housing Administration) loan is a loan insured against default by the Federal Housing Administration. In other words, the Federal Housing Administration guarantees that a lender won’t have to write off a loan if the borrower defaults – they will pay.

FHA loans are not for everybody. Nevertheless, they are a great help to some borrowers.
FHA loans allow people to buy a home with a down payment as small as 3.5%. Other loans might not allow such a low down payment.

Who can get an FHA Loan?

There are limits on how much you can borrow. In general, you’re limited to median home prices in your area. To find the limits in your region, visit HUD’s Website or scroll to the bottom of this page. To qualify for an FHA loan, you’ll need to have reasonable debt to income ratios. You don’t need perfect credit but you will need a credit score of at least 580.

Contact me for more information on your best option.   

FHA loans offer a few other bells and whistles:

– 3.5% down payment required on purchase
– Easier to use gifts for down payment and closing costs
– No prepayment penalty
– Financing for home improvement using FHA 203k programs

Did you know FHA loans are assumable?  

This means that a new FHA borrower could take over the FHA mortgage from someone else.  In some cases, the application and approval process varies depending on when the FHA insured loan was originated.  For most scenarios in 2018, an FHA loan may be assumable.

According to the FHA, under the “Determining if an Assumptor is Creditworthy” rule, the lender, who is the holder or service provider of the mortgage, determines the creditworthiness of the assumptor, in accordance with standard mortgage credit analysis requirements.  The applicant would require the borrower to qualify much the same way they would for any FHA mortgage.  I recommend contacting the existing service agent or digging up your mortgage note to research assumption availability.   This could be an excellent selling point or buying opportunity in a rising interest rate environment of 2018 and beyond.

General Information on Assumptions

2018 FHA Loan Limits in Arizona:

County 1-Unit 2-Unit 3-Unit 4-Unit
All AZ Counties except Coconino $294,515 $377,075 $455,800 $566,425
Coconino County $362,250 $463,750 $560,550 $696,650