FHA Loans

FHA Loans

This type of loan is available only for owner occupied residential structures. FHA insures the lender against potential loss. In the event the loan defaults, the lender is protected against losses. The losses are paid with mortgage insurance funds collected from all FHA borrowers.

Typically 1.75% is collected up front but funded in the loan instead of coming out of the borrowers pocket and in addition another .85% of the loan collected monthly in the payment. A borrower may use this type of loan to purchase a home with as little as 3.5% down payment. Borrowers can only have one FHA loan typically because it is for owner occupancy only.

However, an exception would be if borrower had an FHA loan and moved to a different area or had another approved reason to justify a second FHA loan. Borrowers can also obtain an FHA loan on a home they already own and occupy. These loans have maximum loan amounts available but varies depending on the County, minimum FICO scores and strict rules for income verification and debt to income ratios.

A borrower with a previous foreclosure, short sale and/or bankruptcy can qualify for this type of loan after a set waiting period has elapsed. On Purchase transactions, borrower down payment and/or closing costs can be provided by gift. Financing may be fixed or variable rate loans.