The mortgage lending environment has come full circle in the past 15-years; from the days of strict lending guidelines through the wild-west days of sub-prime options, and back again. Thankfully, the lenders that are survivors carry with them the knowledge and experience necessary to provide sound counsel to home buyers.
One of the old, reliable warrior products that has re-emerged as a leading alternative for home buyers is offered through the Federal Housing Authority, FHA. FHA is does not actually lend money; they simply insure 100% of the loan amount a lender funds.
FHA financing is fast becoming, if not already, the product of choice for many home buyers. To support this notion, the Mortgage Bankers Association reported that FHA insured mortgages represented 38% of the purchase market in June 2009. This is up from 27% of the market in June 2008 and up a staggering 35% since 2005 when FHA held only a 3% market share.
Why has FHA lending escalated to the top of the list for many Realtors and home buyers? Consider these facts on FHA insured mortgages:
- Minimum down payment is only 3.5%
- Credit score requirements as low as 620 (with the minimum down payment!)
- Flexible income, asset and credit requirements
- Allows up to 6% seller contribution toward buyer's closing costs
- Available to all property types; 1-4 family; HVCC not mandated
- No mortgage insurance at 90% LTV with 15-year term mortgages
- Creative renovation programs with the 203K option
- $100 down payment with HUD properties
While these features are attractive, you must be sure you are working with a knowledgeable lender to guide you through the requirements of an FHA insured mortgage. A successful transaction is dependent on a lender that is sensitive to the needs of the borrower yet respectful to the requirements of the underwriting guidelines.
FHA financing is here to stay and Real Finance Solutions is proud to work with dependable lenders that meet the strict mandate of becoming advocates for the consumer.
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