FHA Guidelines: Information about FHA Home Loans
FHA GUIDELINES are important to keep in mind when looking into FHA home loans. FHA loans require that borrowers not exceed a certain debt to income ratio.
Remember also as a borrower that there are other special programs that exist outside of FHA loans. FHA is somewhat of a buzzword around first time home buyers, but lenders are free to offer their own programs that do something very similar to help you get a home.
FHA loans are great for first time home buyers. Because the loans are government insured, lenders are willing to accept smaller downpayments - typically 3 - 5 percent of the loan amount. It is also possible for you to finance your closing costs as a part of the loan if you do not have cash on hand. FHA loans are also assumable, meaning a new buyer can take over the loan without having to qualify first. This makes you property more appealing for resale.
FHA loans require what is called a mortgage insurance premium (MIP). This amount can be financed and is typically 2.25% of your loan amount. Keep in mind that this will increase your monthly payment.
The max loan amount available through FHA will varry greatly depending on where you live. Some places the max for an FHA loan may be $100,000, or even as much as $200,000 in places where the standard of living is much higher. FHA loans are great for investment properties if you are purchasing a second home and do not have enough money to make a large downpayment. To find out if an FHA loan is right for you, fill out an online application and you will be put in touch with a qualified mortgage broker who can answer your questions.
Common FHA Guidelines Questions:
1. What is PMI on an FHA loan?
* PMI (Private Mortgage Insurance) is payed by borrowers who are not putting down very much money on their house. Once the borrower has reached 20% equity in their home PMI can be canceled.
2. Can an FHA loan be used to buy a second home?
* Yes, there is no stipulation that prevents you from doing this. Homeowners sometimes use an FHA loan to purchase an investment property for renters.
3. Does FHA have any loan size limits?
* Yes, these limits vary depending on the size of your family and the standard of living in the area you are moving, ask a mortgage professional to get the figure for your area.