My clients are obtaining 4 types of home loans: FHA, Conventional, USDA and VA. Since the crash of 2007 I have seen home buyer FHA loans go from practically zero three years ago to 90 percent today. Here are 7 things home buyers should know about FHA home loans:
1. FHA Loans Are Not Only For Lower-Income Borrowers. FHA loans are available to everyone. There is no maximum income restriction associated with FHA loans.
2. FHA Loans Are Not Only For First-Time Home Buyers. Its doesn’t matter how many homes you have purchased – FHA loans are a good home financing option.
3. FHA Loans Are Not Just Small Loans; FHA Loan Amounts Can Be As High As $793,750. The government recently raised the cap of $362,790 to $793,750. The amount a buyer can borrow varies from county to county.
4. FHA Loans Have Nothing To Do With The Section 8 Housing Program. Both programs just happen to be under the U.S. Department of Housing and Urban Development (HUD). FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA.
5. FHA Loans Are Often More Affordable Than Conventional Loans. While FHA loans offer similar interest rates as other loans, home buyers benefit from a much lower down payment of 3.5 percent.
6. FHA-Approved Condo Developments Are More Desirable To Buyers. If you are going to buy a Condo, see if it is FHA Approved. New rules in February 2010 state that an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.
7. FHA Loans Are Assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer.