What is an FHA Loan?
What it is…
This program is often referred to as a “first-time buyer” loan. However, you can utilize the leniency and purchasing power of an FHA home loan at any time.
With a low down payment (3.5% of the purchase price), FICO scores allowed down to 580 and flexible guidelines, an FHA home loan is always a viable option.
What it isn’t…
FHA Advantages
Required
Low down payment for all FHA Home Loans.
3.50% Down
Various Programs
Add a down payment assistance program.
Assistance
Types of Properties
SFR’s, Condo’s and Manufactured allowed!
Flexibility
Lenient Guidelines
Less than a perfect credit & income is okay.
Forgiving
FHA Benefits
Only 3.5% Down
FHA only requires a 3.50% down payment with 580+ credit score on all homes.
Streamlined Refinance
“Streamline” your refinance for a lower rate and payment. No appraisal, minimal docs.
580 Credit Score
Flexible requirements, go below a 580 FICO with 10% or more down payment.
55% Debt-To-Income
FHA has one of the most flexible “DTI” requirements out there. More purchasing power for you.
Up 6% Seller Credits
Sellers can help with some or all closing costs. FHA allows up to 6% seller concession.
Self-Employed, Okay!
Working for yourself? No problem, we got you! Qualify on the last two years of tax returns.
Frequently Asked Questions
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You need to wait 3 years after a short sale, or foreclosure to get another FHA loan. You need to wait 2 years from a bankruptcy’s discharge date.
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Collections are okay. Lenders will qualify you with a monthly payment of 5.00% of the balance.
Charge-Off Accounts When an account is “charged off” by a creditor, lenders will not count it as a debt.
Medical Bills (collection) Medical collections are not considered in your qualifying analysis at all.
** Disputed collections
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Yes!
Gift funds are allowed and can cover the entire down payment and even all closing costs.
Gift funds can come from:
Relatives & Immediate family members.
A close life-long friend (this is a tough one but doable).
Your employer or labor union.
Government or public agency.
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The funds used to purchase your new home can come from any of the below:
Checking & Savings accounts
Retirement Accounts (401k, IRA, 403b, etc.)
Stocks or Bonds (once liquidated)
IRS or State tax refund check.
An employer is allowed as well, it would need to be documented and is considered a gift.
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Keep in mind, all money being used to purchase the home needs to be sourced and/or seasoned.
“Sourced”: Meaning the lender can document the funds came from a usable source (normally not cash or loans).
“Seasoned”: Meaning the funds are sitting in a bank account for at least 2-months, to be considered usable. usable.
The below are funds that cannot be used:
Large, unsourced cash deposits.
Cash advance, taken out from a credit card.
Crowdfunding programs.
“Gift Funds” from multiple friends who are not family nor allowed to be donor’s (see gift funds question above).
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Most often times the answer is YES! You don’t have to be with an employer a full 2 years.
However, we need to document a full two years of work. Some carve-outs to consider:
Just graduated college with a degree and started full-time with an employer in the same line as your degree. This is allowed!
You have been unemployed for a year, however you are back to work full-time for six months (or more), in this case we would need to go back and document income & employment with prior employer(s) for at least two years. This is allowed!
