FHA Loans: Very Popular With Home Buyers
The FHA loan program has been one of the most popular loan programs in recent years because of it’s broad appeal and flexible guidelines. In the early to mid 2000’s many home buyers chose other loan options that weren’t FHA, but as the subprime mortgage crash happened, more people started financing their home with an FHA loan. The FHA loan originally was designed to help first time home buyers get into their first house as well as help people who had less than perfect credit. But today, you will find the FHA loan is popular not only with first time home buyers and people who have less than perfect credit – but with all different types of people in all types of situations.
FHA Loan Highlights in 2016
When you take out an FHA loan, the advantages include lower down payment (sometimes) than Conventional loans, sometimes lower mortgage insurance costs than conventional loans and generally more flexible underwriting guidelines. The disadvantages include paying mortgage insurance (both up front – called UFMIP- as well as monthly – called MIP), varying loan limits and not all lenders will offer FHA loans.
2016 Highlights of FHA loans include:
- 3.5% down payment
- Down payment assistance programs allowed
- Rehab loans available (FHA 203k) for fixer-uppers
- More flexible underwriting guidelines
- UFMIP – Up Front Mortgage Insurance required
- MIP – Monthly Insurance Premium required
- Manufactured home loan options available
- FHA streamline program for easy FHA to FHA loan refinance when rates dip
FHA Loans and Down Payment Assistance Programs
Even with a low down payment requirement, many families struggle to come up with the 3.5% down payment required for an FHA loan. According to FHA guidelines, certain down payment programs are allowed – so it is important to check with your loan officer about what down payment programs are available to you. Down payment assistance programs can be available based on area, income or other criteria – and you may be surprised to learn of down payment assistance programs that can be used to help you with your down payment.
HUD offers some resources to those people who are interested in learning more about the process of buying a home, and the information on HUD’s website is free. Just a few of the services that HUD offers information about include:
Housing counseling agencies – free or low-cost counseling services for buying, renting, defaults, foreclosures, credit issues and reverse mortgages
Predatory lending – beware if you’re buying or refinancing your home; don’t become a victim of unfair lending practices
Education – learn about buying and maintaining your home
Assistance programs – resources and programs to help you buy and maintain your home
HUD homes for sale
Homeownership vouchers – some public housing agencies help you become a homeowner through the Housing Choice Voucher Homeownership Program
Home repairs – money for home improvements and repairs
Avoid foreclosure – don’t lose your home
Make your home more energy efficient
See more information about HUD here.
Getting The Best Deal
When shopping for an FHA loan, getting the best deal often may mean working with not only a loan officer who is knowledgeable, but that the loan officer works at a lender who offers great rates and closing costs. As with loan officers, FHA lenders are often different and offer different rates and fees. The best way for you to know which loan officer and lender are right for you is to get multiple quotes from multiple FHA approved lenders. Getting a quote involves speaking with a loan officer, providing the requested information and then getting a written quote in writing. When buying a home, it is also a good idea to get pre-approved so that you know you can qualify as well as how much you can qualify for. Getting pre-approved and shopping multiple lenders is easy, but it does take a few minutes. We have made it easy to shop and compare lenders with our lender matching service.