Fixed Rate FHA Loans
The Popular 203(b) Federally Guaranteed Mortgage
Home ownership rates in America continue to increase at a steady rate due in a large part to the implementation of FHA home loans insurance program. Over the years, FHA has helped Americans gain the financial independence that comes with owning a home. By creating jobs and reasonable mortgage rates for the middle class, financing military housing, and producing housing for the low income and the elderly, FHA has helped Americans become some of the best housed people in the world with a homeownership rate of 64.2% for Americans currently owning their own homes. FHA has insured more than 46 million home loans since 1934.
HOW IT WORKS
By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA's mortgage insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines.
FHA loans benefit those who would like to purchase a home but haven't been able to put money away for the purchase, like recent college graduates, newlyweds, or people who are still trying to complete their education. It also allows individuals to qualify for a FHA loan whose credit has been marred by bankruptcy or foreclosure.
NUTS AND BOLTS
The most popular FHA home loan is the 203(b). This fixed-rate loan often works well for first-time homebuyers because it allows individuals to finance up to 96.5 percent of their home loan which helps to keep down payments and closing costs at a minimum. The 203(b) home loan is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency.
FHA will collect the annual MIP, which is the time on which you will pay for FHA Mortgage Insurance Premiums on your FHA loan. Cancellation of the premiums are as follows:
- No more than 15 year term
Loan to value at closing up to 90%
11 year termination - No more than 15 year term
Loan to value at closing greater than 90%
No cancellation until loan paid off - Greater than 15 year term
Loan to value at closing up to 90%
11 year termination - Greater than 15 year term
Loan to value at closing greater than 90%
/No cancellation until loan paid off
GUIDELINES
It is not necessary to meet a minimum income requirement in order to qualify for a FHA loan but debt ratios specific to the state in which the home will be purchased have been put into place to prevent borrowers from getting into a home they cannot afford. This is done through a close analysis of income and monthly expenses.
FHA Loan Programs
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FHA Loan Articles and Mortgage News
April 19, 2024 - We write about many details of FHA home loans, and if you are on the path to homeownership for the first time, it helps to know some of the facts and fiction surrounding these home loans before you start looking for a home, a lender, or applying for pre-qualification.
April 17, 2024 - There is plenty of bad information about home loans in general and FHA loans specifically. You may encounter some of these in the wild when searching for a lender and a home to buy with an FHA mortgage.
April 16, 2024 - Home loans have many similar features. They require down payments, have appraisal standards, and may have rules on how you can use the property you buy. How do home loans compare to one another? We examine some of the major issues in this article.
April 14, 2024 - When a first-time homebuyer starts researching their options for a mortgage loan, it’s easy to find bad information and half-true information online, even from otherwise trusted sources. Some publications do their due diligence and review FHA loan rules to ensure accuracy.
April 12, 2024 - There are important choices to make when deciding whether to rent or own, but making the most informed choice is crucial. Some don’t think about the advantage of a fixed mortgage payment over rent that potentially increases year to year.
