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What
is FHA Mortgage Insurance?
The Federal Housing Administration (FHA) insures
mortgages offered by banks, savings associations,
and other financial institutions. An FHA-insured
mortgage is backed by the full faith and credit
of the United States government. While FHA does
not make loans, it benefits the homebuyer by
providing mortgage insurance which encourages
financial institutions to make affordable financing
available.
What
are the benefits of an FHA Mortgage?
FHA
offers low down payment options, eligibility
with less than perfect credit, a loan at a reasonable
cost, and help if there is ever trouble making
the mortgage payment. Because an FHA mortgage
insures the lender against loss, an FHA mortgage
typically has an interest rate that is competitive
with the best in your market and lower than
the rates charged for subprime and other non-primemortgages.
FHA not only helps people buy a home, but helps
them keep it as well. In return for protecting
lenders against loss, FHA requires financial
institutions to offer assistance to borrowers
experiencing difficulty making mortgage payments.
What
is the required down payment amount?
For an FHA mortgage, buyers need only a 3.5%
down payment amount. Currently, many conventional
loans may require up10 to 20% down payment.
What
is the FHA loan limit?
In King, Pierce and Snohomish Counties, the
2009 FHA loan limit for a single family dwelling,
townhome or condo is $567,500.
What
are the elibility guidelines?
In order to be eligible for an FHA-insured mortgage,
a borrower must:
- Occupy
the property as the principal residence;
- Possess
a valid Social Security Number;
- Have
a two-year employment history; School and
military service count towards this two-year
requirement.
- Not
be delinquent on any Federal debt such as
a student loan or other FHA-insured mortgage;
and
- Meet
flexible credit requirements.
Other
benefits of an FHA Mortgage:
- A
minimum credit score is not required. In fact,
one may not be turned down for an FHA mortgage
solely for lack of credit history.
- The
buyer’s entire cash investment—as little as
three-and-a-half percent—can be a gift from
a family member, employer, charitable organization
or local government entity.
- The
seller can contribute up to six percent of
the home’s price toward closing costs through
a seller’s concession.
- There
are no prepayment penalties on FHA-insured mortgages.
- U.S.
citizenship is not required but, for those who
are not citizens, they must be lawful permanent
or non-permanent resident aliens with a valid
Social Security Number.
For
more in-depth information, please Contact
Us and we'll be happy to answer your questions.
If
you're a first-time home buyer, be sure to read
about the 2009
First Time Home Buyers Tax Credit.
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