| Benefits and Highlights of FHA: | | | | FHA will allow us to not count any monthly obligations |
| Below I will attempt to point out the benefits of an FHA | | | | you may have for student loans if we can document |
| Mortgage loan compared to a Conforming loan. | | | | these loans are deferred for at least 12 months. |
| If you are considering purchasing a home, FHA will | | | | (Conforming loans will make us count all student loan |
| allow you to put down as little as 3.5% of the | | | | payments regardless if they are deferred for 36 |
| purchase price, plus closing costs. (Conforming loans | | | | months or more) |
| generally require 5% down payment and the 5% must | | | | FHA may allow you to qualify even if you had a |
| come from the borrowers own funds) FHA will allow | | | | bankruptcy at least 24 months since discharged for a |
| the 3.5% of the down payment to come in the form of | | | | chapter 7 and for a ch 13 bankruptcy filed and paid |
| a cash gift from a relative or other person with which | | | | documented paid as agreed for only 12 months. |
| a close friend with a clearly defined and documented | | | | (Conforming loans will require 48 months since |
| interest in the borrower. The gift may also not only | | | | bankruptcy was filed) |
| cover the 3.5% down payment, it may also cover the | | | | FHA may allow you to qualify if you had a prior |
| closing costs. (Conforming loans require the gift to be | | | | foreclosure as long as the foreclosure was greater |
| at least 20% of the purchase price in order for the | | | | than 36 months ago. (Conforming loans will require a |
| borrower not to need 5% of the purchase price from | | | | minimum of 60 months since foreclosure). FHA |
| their own funds) | | | | mortgages may also be assumable as long as the |
| What does FHA allow? | | | | party assuming the mortgage can qualify per income, |
| FHA allows the seller of the property to give the buyer | | | | credit and down payment. This is HUGE if/when the |
| up to 6% of the purchase price to cover closing costs | | | | time comes when you want to sell your home and |
| with only 3.5% down payment. This may be used | | | | your mortgage is at an interest rate which is a |
| toward title fees or other closing costs and also to | | | | historically low interest rate of the current environment. |
| possibly buy down your interest rate. (Conforming | | | | This not only will give you a major advantage over |
| loans will only allow 3% seller paid closing costs unless | | | | other property owners selling their houses at that time |
| the down payment is a minimum of 10%) FHA may | | | | allowing you to sell your home faster, you may also be |
| allow you to qualify with a debt to income ratio of up | | | | able to get a higher sales price for your home. |
| to and possibly over 50%. with only a 3.5% down | | | | (Conforming loans do not allow for any assumability) |
| payment if you can receive an automated underwriting | | | | FHA has a loan program which is a streamline |
| approval. (Conforming loans will require a maximum | | | | refinance. If rates do happen to fall lower you may be |
| debt to income ratio of only 41% unless you put 20% | | | | able to refinance without getting another appraisal , |
| down payment) | | | | without documenting your income at that time and still |
| FHA Mortgage will allow a non occupant co borrower | | | | being able to qualify for the lower rate, if rates do |
| to also purchase the home and be a borrower on the | | | | happen to go lower. If you are considering buying a |
| loan with you if additional income and/or assets are | | | | home and you do not believe you may qualify, FHA |
| needed to meet the qualifications. (Conforming loans | | | | may be just the right program designed to help you |
| will not generally allow this unless you can qualify per | | | | realize your dream of being a home owner. |
| the debt to income ratio's requirements by yourself.) | | | | |