FHA 3.5 DP


FHA Mortgage Insurance Program ; Program that helps low and moderate income families become homeowners by offering loans with lower down payment requirement.  FHA mortgage insurance also encourages mortgage companies to make loans to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements, by protecting the mortgage company against loan default on mortgages for properties that meet certain minimum requirements–including manufactured homes, single-family and multifamily properties, and some health-related facilities. Today, FHA One to Four Family Mortgage Insurance is still an important tool through which the Federal Government expands home ownership opportunities for first time home buyers and other borrowers who would not otherwise qualify for conventional loans on affordable terms, as well as for those who live in under served areas where mortgages may be harder to get.


FHA Mortgage Insurance Costs ;  On FHA loans, the borrower will be charged a mortgage insurance premium (MIP) equal to 1.00% of the purchase price of the property (can be financed into the loan) and a monthly MIP equal to 1.15% of the loan amount for 30 year fixed rate mortgages and .55% for 15 year Fixed rate mortgages.


Down Payment for FHA Loans ;  FHA requires 3.5% down payment. The down payment can be 100% gift funds. Verification of the source of gift money is not required. However, it is necessary that the gift funds be deposited in the borrower’s bank or savings account, or in an escrow account, prior to underwriting approval. Proof of deposit is required.  Gift donors are restricted primarily to a relative of the borrower. They can also be certain organizations, such as a labor union or charitable organization. There are also various state and federal down payment assistance programs available to First time home buyers.  Contact your local HUD office for complete information.


FHA Streamline Refinance ; A program that reduces the amount of documentation and underwriting that needs to be performed by the mortgage company. The word “Streamline” does not mean that there are no costs involved in the refinance transaction.  There are two FHA Streamline Refinance programs, Streamline with Appraisal and Streamline without Appraisal. Only Streamline with Appraisal allows the closing costs to be added to the new mortgage.


FHA Rehab Mortgage – 203 K ; A home rehabilitation program that enables you to finance both the purchase or refinance of a house and/or the cost of its rehabilitation through a single mortgage. The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place. Section 203(k)-insured loans can finance the rehabilitation of the residential portion of a property that also has non residential uses; they can also cover the conversion of a property of any size to a one to four unit structure.


FHA Energy Efficient Mortgage ; A program that provides mortgage insurance for the purchase or refinance of a principal residence that incorporates the cost of energy efficient improvements into the loan. To be eligible for inclusion in the mortgage, the energy efficient improvements must be cost effective, meaning that the total cost of the improvements is less than the total present value of the energy saved over the useful life of the energy improvement. The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or energy consultant.     “By Ed Eissa”


For more information regarding each FHA loan program, please contact me @ 858-750-0931.

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