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Federal Housing Administration (FHA) Help For Homeowners
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How To Get
Government
(FHA) Help With
Your Mortgage
If you are in the market for a mortgage with
less than 5% down payment the best place
to start looking is a Federal Housing
Administration (FHA) loan. FHA loan
requirement guidelines are very flexible.

You can have as little as 3.5% of the
purchase price for a down payment.
However, you should be aware that you will
have to pay Private Mortgage Insurance
(PMI).

Basic FHA loan requirements:

Minimum of two years of stable
employment, preferably with same
employer.

The last two years Income should be the
same or increasing.

Credit report should typically have less than
two thirty day lates in last two years with a
minimum credit score of 620 or higher or in
some cases no credit score at all. The
borrower needs two lines of credit on his
credit report. If the two lines are lacking,
FHA will consider alternative credit, such as
the payment of rent and utilities.

Bankruptcy's must be at least two years old,
with perfect credit since discharge.

If you had a foreclosure you must wait at
least three years before applying, and you
must have perfect credit since the
foreclosure.

Your mortgage payment should be 30% of
your gross income.

Get all your documents together, check the
internet for FHA approved lenders, and
start shopping for your mortgage.
FHA Mortgages:
Several Types
To Choose From
Congress created the Federal Housing
Administration (FHA) in 1934. The FHA
became a part of the Department of
Housing and Urban Development's
(HUD) Office of Housing in 1965.

There are several types of FHA loans so
there is the possibility that a borrower
might qualify for one type and be denied
for another type. My best advice is to talk
to a broker that specializes in FHA loans.

FHA LOAN: Adjustable Rate Mortgage

The FHA adjustable rate mortgage is a
HUD mortgage specifically designed for
low and moderate-income families who
are trying to buy a house.

The pros: Low mortgage payments in the
early years. This makes it easier for a
renter to transition to a homeowner.

The cons: The monthly mortgage
payments can go up. The borrower will be
advised of increases. There is limited
protection for the borrower. The rate
cannot increase by more than 1% in one
year, and by more than 5% over the life of
the loan.

FHA LOAN: Fixed Rate Mortgage

An FHA loan benefits those who would
like to purchase a home but haven't been
able to put money away for the purchase,
like recent college graduates or
newlyweds.

The pros: The interest rate and the
mortgage payments stay the same
throughout the life of the mortgage.

The cons: When rates fall the borrower
cannot take advantage because he is
locked in. To get out of the current rate
and get a much lower rate, the borrower
will have to refinance. If he decides this is
the way to go he wiil have to pay a penalty.

My advice would be to choose the fixed
rate, and if you want to refinance, make
sure you account for the fees and
penalties to see if it is worth the trouble.


FHA Mortgages for condominiums

FHA Condominium Loans are specifically
designed toward those who purchase
housing units in a condominium building.
These are people who do not want the
bother of house repairs and maintenance.
It also caters to those who like the
amenities, such as swimming pools,
game rooms, exercise rooms and party
rooms. Some high end condominiums
also have valet service.

The pros: The borrowers do not have to
make repairs, and utility costs are
included..

The cons: The borrowers have to pay a
management fee.
Get A Mortgage
After Bankruptcy

Filing for bankruptcy doesn't exclude you
from an FHA mortgage. You have to wait a
few years and demonstrate that your credit
is reestablished and back on track

CHAPTER 13 BANKRUPTCY:

FHA will consider approving a borrower who
is still paying on a Chapter 13 Bankruptcy if
those payments have been satisfactorily
made and verified for a period of one year.
The court trustee's written approval will also
be needed in order to proceed with the loan.
The borrower will have to give a full
explanation of the bankruptcy with the loan
application and must also have
re-established good credit, qualify financially
and have good job stability.

CHAPTER 7 BANKRUPTCY:

At least two years must have elapsed since
the discharge date of the borrower's
Chapter 7 Bankruptcy, according to FHA
guidelines. This is not to be confused with
the bankruptcy filing date. A full explanation
will be required with the loan application. In
order to qualify for an FHA loan, the
borrower must qualify financially, have
re-established good credit, and have a
stable job.
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