FHA Loans

FHA loans are insured by the Federal Housing Administration (read about FHA’s history here). FHA loans remain the most flexible loans from a credit score, credit history, and down payment perspective. FHA is also the most common loan that is paired with down payment assistance programs. Here is a general overview of FHA loan characteristics:
DOWN PAYMENT:
3.5% of the purchase price (can be a gift from a relative)
MAX LOAN AMOUNT:
Depends on your county (See Limits Here)
UPFRONT MORTGAGE INS.:
1.75% of the base loan amount (can be financed)
MONTHLY MORTGAGE INS.:
1.35% annually* (for less than 5% down payment 30 Yr Fixed Loans)
1.25% annually* (for 5% or greater down payment 30 Yr Fixed Loans)
.70% annually* (for less than 10% down payment 15 Yr Fixed Loans)
.45% annually (for 10% or greater down payment 15 Yr Fixed Loans)
* – These options have MI for the life of the loan
Below is a summary of the waiting periods FHA requires for most major derogatory credit events:
BANKRUPTCY CHAPTER 7:
2 year waiting period from the date of discharge. An explanation is required.
BANKRUPTCY CHAPTER 13:
No waiting period required if Chapter 13 was completed successfully. If you are still in Chapter 13, you have to get permission from the court to proceed with a home purchase and you have to have been paying on the Chapter 13 successfully for 12 months or more.
SHORT SALE:
3 year waiting period from the date of sale. An explanation is required. There is an exception to the 3 year waiting period if you did a short sale and didn’t have any mortgage late payments prior to or during the short sale. Your other credit accounts also had to be paid on time. There are some additional caveats, so contact us if you think you might qualify for an exception.
FORECLOSURE:
3 year waiting period from the public trustee’s certificate of purchase. An explanation is required. There is an exception to the 3 year waiting period if you qualify under the FHA Back to Work program. Call us to see if you meet this exception.

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