FHA Loans

An FHA loan is a government insured loan and will allow a lot of latitude in the prequalification process that a conventional or jumbo loan will allow. They are used for purchases and refinances as well. The benefit of an FHA loan is that they will allow for minimal down payment of 3%, or less if combined with another program, they do not require reserves left over in your account after close of escrow, they allow for a non-occupant co-borrower to asset you in qualifying for a home, all of the 3% down payment and all of the closing costs can be a gift, seller contributions are allowed up to a maximum of 6% of the purchase price, you only need 3 years away from a bankruptcy instead of 4 to 5 years with a conventional loan, and a lot of other great benefits. This is a great first time home buyer loan and not all lenders are approved for FHA loans and may not offer them to you as an option because of this. We have been FHA approved for over 12 years. The FHA guidelines for home buying and refinancing can be found by going to their website:http://www.hud.gov/buying/index.cfm

As you have read about FHA loans above you can combine an FHA loan with what is called a down payment assistance program. Normally you would need about 6.5% of the purchase price in money available from one of the above sources to close a straight FHA loan. So for an example on a $350,000.00 purchase you would need approximately $22,750.00 to close escrow. If the seller is willing to participate in a down payment assistance program they can contribute up to a maximum of 6% of the purchase price to the program and in turn the program will fund all but $500.00 towards the buyers down payment, recurring and non-recurring closing costs. By doing this it falls within FHA’s guidelines of where the money can come from to close escrow (grant from a non-profit is acceptable). This enables the borrower to reduce the amount they need to close escrow to less than $3,000.00 of their own funds! Quite a savings! Another potential benefit is that the seller MAY be able to deduct this from their income taxes, as it is a donation to a non-profit program. Find out more about one of the many down payment assistance programs by looking at this site www.sgadpa.com or contact us for more information. (Above mentioned figures are subject to change.)