The return of FHA financing.
With the disappearance of most zero down, easy qualifying loan programs, FHA has re-established itself as one of the best financing tools in today’s real estate market. Some of the highlights of the FHA loan program include:
Higher loan to values allowed: For loan amounts up to $417,000, purchases require only 3% down, rate and term refinances are allowed up to 97% of appraised value, and cash out refinance are allowed up to 95% of the appraised value. For loan amounts above $417,000, purchases require 5% down, and refinances are allowed up to 95% rate and term, or 85% for cash out.
More lenient credit guidelines: Credit score requirements are less stringent than those for conventional loan programs, and for borrowers with little or no credit history, alternate lines of credit can be verified to create an acceptable credit history. Also, borrowers with at least one year satisfactory repayment on a Chapter 13 bankruptcy are eligible for FHA financing.
More streamlined appraisal process: FHA has removed the more difficult appraisal requirements of their past. They no longer require minor repairs for cosmetic defects or normal wear and tear. They also no longer require “section one” termite work to be completed, nor do they have any “declining market” restrictions that conventional loans presently have.
New higher loan limits: New legislation passed by Congress has raised the loan limits through the end of 2008. The new loan limits are $697,500 for San Diego County, $500,000 for Riverside/San Bernardino Counties, $325,000 for Imperial County, and $729,750 for Orange, Los Angeles, and Ventura Counties.
Other highlights include: There are no borrower reserve requirements on FHA loans (except for 3-4 unit properties), all monies need for down payment or closing can be from a gift, non-occupying co-borrowers are allowed to help qualifying, and a seller can pay up to 6% of the sales price for recurring and non-recurring closing costs.
While many lenders are just learning about FHA loans, we have been experts for years. If you would like more information on this program, please feel free to contact me at 760-497-7705, or at bscruggs@sdmn.net.
Baxter Scruggs
Managing Partner
San Diego Mortgage Network