Federal Housing Administration Loans (FHA) Updated 12/15/2009

FHA loans are quickly becoming the loan of choice for homebuyers whom are working with limited cash or do not meet traditional credit guidelines.

FHA loans are a perfect match for the the current $8,000.00 first time buyer or current homeowner credit of $6,500.00

Down payment requirement: Varies based on loan size – generally you need to invest a minimum of 3.5% of the sales price using an FHA loan. This 3.5% can be used toward down payment and/or closing costs.

Maximum loan Amount: Loan amounts vary by counties and number of units. In Wayne & Oakland County, the maximum loan amount for FHA loans is $297,300.00. Please contact me to get maximum loan limits for other areas.

Mortgage Insurance: With an FHA loan you will be required to pay an Upfront Mortgage Insurance Premium of 1.750% of the loan amount. This amount can be financed or paid in cash at time of closing by either purchaser or seller.

Monthly Mortgage Insurance Premium: With an FHA loan you will pay a monthly mortgage insurance premium of .55% for loans with terms greater than 15 years and .25% for loans with terms of less than 15 years. The monthly premium will be dropped once you have paid loan down to 78% of original cost and have owned no less than five years.

Interest Rates: Rates on FHA loans are the same as conventional loans with added insurance provided by the United States government.

Income Limits: There are no income limits with FHA loans.

Property Condition: FHA has revised its guidelines fro property inspections and is no longer concerned with minor defects or normal wear and tear. FHA is still concerned with any defect that could pose a threat to the safety of occupant and/or jeopardizes the soundness and structural integrity of the property.

Seller Concessions: With an FHA loan, the seller can contribute up to 6% of the sales price toward the borrower’s down payment, closing costs, prepaids and interest rate buydown. Keep in mind that the borrowers still has to invest a minimum of 3.5% of the sale price.

Gifts: FHA allows 100%gifts for all monies needed in a FHA transaction.

Terms: 30 & 15 year fixed rates, ARMS and MSHDA are available

Occupancy: All FHA loans require property to be owner-occupied for up to a maximum of 4 units.

Qualifying Ratios: 31/43 with compensating factors justifying higher ratios.

Resale: Seller must own home for a minimum of 90 days prior to signing a new purchase agreement. FHA requires two appraisals for sale between 91-180 days to confirm true market value.

Termite Inspections: Only required if there is evidence of active infestation.

FHA Refinance Options: Extremely flexible – Ask Dan for program details and benefits.

Visit www.hud.gov for more detailed home financing information.

www.danthemortgageman.com

Daniel B. Smith - Your FHA Lending Expert

313-801-7800