Based on my last posting, you might think that you should avoid FHA loans. On the contrary, FHA loans are a great option right now. Here are some of the benefits. The main thing to look for is a loan agent that has a good FHA appraiser and a good relationship with a direct FHA lender.

  • Lower down payment (currently 3.5%)
  • Down payment can be all gift from eligible source
  • Seller may pay all closing costs up to 6% of the sales price
  • Cash reserves not required for single family home purchase
  • Higher and flexible qualifying ratios
  • More leniency on derogatory credit than a conventional loan (minimum score is 580)
  • Lower cost than a conforming loan if credit is less than perfect
  • Monthly mortgage insurance cost is less than a conventional loan
  • Blended ratios with a non- occupant co-borrower
  • Up front Mortgage Insurance Premium can be financed or paid for by a seller credit (within the 6% limit).
  • FHA loans are assumable
  • No prepayment penalties
  • No termite required if not called for in the contract and property is over 1 year old
  • Loan amount for single family residence up to $625,500.00!
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