FHA loan requirements | FHA Lender in Houston TX Area

FHA Mortgage Loans

The FHA’s mission driven organization encourages home ownership and provides affordable housing opportunities with low down payment and flexible credit requirements.

Since 1934, the FHA has insured millions of home mortgages with a market share of 30% in 2010 vs 3% in 2007.  In 2009, FHA programs insured nearly 2 million loans, which included 750,000 first-time home buyers.

According To Wikipedia:

The Federal Housing Administration (FHA) was created out of the National Housing Act of 1934, and was established to increase home construction, reduce unemployment and insure government loan programs.

FHA loans have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient insurance.

Some FHA programs were subsidized by the government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers.

While most people believe that the FHA lends money directly to borrowers, it actually just insures a certain type of loan that is financed by traditional banks and mortgage lenders.

Four of the most visible single family housing programs that FHA offers are, Section 203(b), Section 234(c), Section 203(k) and Home Equity Conversion Mortgages (HECM) – Reverse Mortgages.

FHA Loan Type Highlights:

Section 203(b)

  • largest of FHA’s single family programs
  • 1-4 unit properties are eligible
  • flexible credit requirements
  • 3.5% down payment allowed
  • down payment may be a gift from specific sources
  • Loan Limit for surrounding Areas in Houston, TX $331,200

Section 234(c)

  • provides mortgage insurance for individual condominium units
  • credit, down payment and limits of 203(b) apply
  • in 2010, condominium complexes must be approved through HRAP/DELRAP to be eligible for FHA insurance

Section 203(k)

  • primary program for property rehabilitation
  • encourages community and neighborhood revitalization
  • only 1 mortgage loan is used for both the acquisition and the renovation
  • 1-4 unit properties including condominiums are eligible; check with your lender for manufactured housing eligibility
  • required improvements include cost effective energy conservation standards and smoke detectors
  • consultancy may be required

HECM – Reverse Mortgages

  • FHA was the first to promote reverse mortgages nationally
  • allows access to equity in property with flexible terms
  • lump sum, monthly payments, line of credit or a combination available
  • limited to homeowners 62 years of age and older

FHA programs go beyond the scope of the previously listed programs. They offer a Streamline Refinance as well as a Streamline 203(k) for limited repairs. Also, recent legislation has helped FHA offer special programs with incentives to lenders for modifying and refinancing existing mortgages like with the “Making Home Affordable Program.”

When looking for a loan program to fit your specific needs, take a close look at FHA as their programs have become more attractive to both lenders and consumers.

With favorable loan terms, higher loan limits, 30 year fixed repayment terms and flexible down payment options, FHA will continue to encourage home ownership, provide liquidity and stability to the mortgage market.

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Frequently Asked FHA Questions:

Q. What are the credit requirements for most FHA lenders?

As of 2010, the majority of lenders are leaning toward a mid credit score of 640.

Q. How much can I afford?

By providing your mortgage professional the required documentation, a detailed analysis will be provided that includes your maximum loan amount

Q. How will I know if the condo/townhome I wan to buy is eligible for FHA financing?

The following link will allow you to enter your zip code for a list of eligible properties:  CLICK HERE

Required Documentation:

 

  • Driver’s License
  • Social Security Card or passport
  • Last 30 days paycheck stubs
  • Last 2 years W2s or 1099 from Employer
  • Last 2 years signed Tax Returns
  • All pages of previous 2 months bank statements
  • Most recent retirement account statement (401k, IRA, etc.) if applicable
  • Copy of the benefits letter (Social Security or retirement)
  • Copy of Final Bankruptcy discharge papers (if applicable);
  • Name, address and phone number of current landlord (if renting);
  • Letter of Explanation for any known credit problems;
  • Source of any non-payroll deposits
  • Gift Letter (if applicable)

The most important thing to understand is that the loan approval process is 100% dependent on your documentation. To insure a smooth transaction, it is extremely important you have all of your documents gathered prior to you initial loan application. This will help expedite the process and help us get you a fast approval!

It’s easy to understand why many people looking for a new home are turning to FHA insured loan programs. Because FHA Loans are insured by the Federal Housing Administration homebuyer’s have an easier time qualifying for a mortgage. Those who typically benefit most by an FHA loan are first-time home buyers and those who have less than perfect credit.

FHA insured mortgages are some of the best kinds of mortgages available. This is because they can help more people into the home buying market. Check out the list below to understand some of the most basic benefits of an FHA mortgage.

Easier to Qualify for – because they’re backed by the federal government lenders are more likely to give you the kind of loan that you need.

Low Down Payment – FHA insured mortgages only require a 3.5% down-payment which makes it easier for people to own homes. Additionally the 3.5% can come in the form of gifts, unlike many other loan programs.

Lower Credit Borrowers Qualify – because FHA insured loans are backed by the government those with a poor credit history have an easier time getting this kind of loan.

Better Interest Rates – with the backing of the government these loans typically have a better interest rate than most traditional mortgage loans.

Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times. The will work with you to help your home from falling into foreclosure. Always try to work out problems with your lender before the situation becomes dire.