Federal Housing Administration Loan

Things to remember about FHA loans:

1. Any past bankruptcy must be at least 2 years old and the applicant must have had good credit for at least 2 consecutive years following the bankruptcy.
2. Any history of foreclosure must be at least 3 years old and followed by at least 3 consecutive years of good credit.
3. You must have had a stable income for at least 3 years and proof that you have paid all your bills.
4. You must be able to make a 3.5% down payment, which is considerably lower than conventional loans.
5. Typically closing costs and prepaid items are approximately 3% of the purchase price.
6. Monthly payments must be roughly 31% of your gross income.
7. You can assume a FHA loan from a seller or pass it on to a buyer.
8. Any cost associated with the title, including the title search and title insurance for the home.

There are also eligibility requirements for the home. Properties that are eligible for a FHA loan include: single-family homes, 2-4 unit properties, condominiums, double-wide manufactured homes and modular homes. Ineligible homes include (but are not limited to) co-ops, boarding houses, commercial properties, hotels, and private clubs. A home is also ineligible if the seller acquired the house within the past 90 days. For any property over 10 acres, the loan will be based on the price of the house and the first 10 acres only. Additionally, the property must be used as a primary place of residence.

One type of FHA loan that has a couple of other specific guidelines is the 203(k) loan, which is used for buying and remodeling a home. The home must be at least 1-year-old and the rehabilitation of the property must cost less than $5,000.

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Take the next step Get connected with a FHA Loan Specialist who can help you maximize your FHA Loan benefits and let you know what you qualify for. There are no obligations and your credit will not be pulled.