Tips on How to Get an FHA-Insured Mortgage

March 16th, 2009 § 0

fhaWhile it has become significantly harder to get a loan these days, and even if borrowers who are capable of making only small down payments are experiencing tougher odds, the Federal Housing Authority still offers 3.5% down loans to qualified applicants.

The FHA has received an impressive number of applications—it has helped 630,000 successful applicants to purchase homes in 2008, while most these borrowers have taken the low-down payment loans.

Here are some helpful tips on how to get an FHA-insured mortgage:

  1. Call your mortgage broker or search the U.S. Department of Housing and Urban Development website for an FHA-approved lender. They will look into the buyer’s credit history but the interest rates are not based on one’s credit rating. Take note that applicants with scores of 500 or less will be obliged to pay a down payment of 10% instead of the 3.5% minimum.
  2. Insurance premiums, which cover possible non-payment, are also collected by the FHA. Applicants are charged with the straight fee of 1.5% to 2.5% of the loan’s dollar-value, as well as the 0.5% annual fee. FHA borrowers are not allowed to exceed the $271,500 loan limit. In New York and California, the limit for single homes is $625,000. A qualified applicant’s income must not exceed 80% of the area’s average income. Once the loans are approved, keep a good track record. The FHA keeps foreclosures at bay by working together with delinquent customers.
  3. Even with credit restrictions, the fact remains that people still acquire safe mortgages with very little money and this keeps the market going.

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