| FHA Loans Have a Fresh New Look | September 3rd, 2008 |
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FHA loans used to be out of the question for San Francisco home buyers. The loan limits were way too small (around $417,000) and required squeaky clean credit and healthy incomes. Today, FHA loan limits in San Francisco have been boosted to $729,750. With 5% downpayments acceptable to the FHA, this makes a $750,000 purchase price much more doable. The FHA has also substantially loosened their lending requirements. Excellent credit is no longer required and buyers can get into a single family home or condo below the $750,000 threshhold with as little as 3% down (no you did not misread that–). The FHA’s target audience for their loans are: First-time homebuyers, borrowers with mediocre credit (or even no credit), those with limited resources for a downpayment, and homeowners who want to refinance. It may sound like there’s a catch to all this– but there’s not. These are real loans are we are closing deals at Paragon with buyers who are obtaining them. Other FHA loan perks: Easier Qualification - With the FHA backing the loans, lenders are willing to loosen their lending requirements– and will often lend more money to you than they might through other kinds of loan programs. Low Downpayment OK - Other loans require at least a 5% downpayment and it has to be your own money, so gifting a downpayment isn’t allowed. An FHA lender is fine with downpayments as little as 3% down and getting that 3% from a friend or family member is not a problem. Cash Reserves Not Required - Most lenders insist that you to have 3-6 months carrying costs in the bank. FHA loans don’t require that kind of cushion. These loans are not for everyone. FHA loans are fixed for thirty years and those with itty-bitty downpayments will be required to pay a 1.5% fee for mortgage protection insurance. If you have at least 10% down, good credit and a job with W-2s and pay-stubs, you would probably be better off going with a different loan product. Leave a Reply |
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FHA loans are loans insured by the Federal Housing Administration, a part of the Department of Housing and Urban Development. The FHA is anxious to help first time home buyers get into the market and those with ugly rate adjustments refinance into more affordable house payments.