FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development. Texas Premier Mortgage is a qualified FHA Lender located in The Woodlands, TX, and does business in surrounding areas such as Houston, as well as the entire state of Texas.
FHA loans are an attractive option, especially for first-time homeowners:
- Generally easier to qualify for than conventional loans.
- Lower down payment requirements.
- Cannot exceed statutory loan limits.
HUD 203(B) MORTGAGE INSURANCE
What is the purpose of this program?
To provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD.
What are the eligibility requirements?
- The borrower must meet standard FHA credit qualifications.
- The borrower is eligible for approximately 96.5% financing. The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.
- Eligible properties are one-to-four unit structures.
Learn more about FHA loans. (Department of Housing and Urban Development)
How to pre-qualify for a FHA Loan?
They must have at a minimum:
- Acceptable credit rating
- A minimum of 3.5% down payment
- Show ability to repay the mortgage as set forth by HUD guideline.
Texas FHA Loans
Plenty of people know enough about home financing to know that the money to purchase a house comes from the bank. However, many people are not aware of what loan products a bank has and that there are many, many different types of home loans. Based upon your lifestyle, one type of loan may be a better option for your situation than another. The Texas FHA loan program, for example, is a great option if you’re a first time homebuyer and would like to take advantage of the low prices in the current real estate market but may not have perfect credit or haven’t saved enough money for a down payment from traditional loan programs. And since the program is managed by the Federal Housing Administration, you can be sure that the loan you’ll receive will be an ethical, responsible product.
Texas FHA Loan Benefits
Texas FHA loans require only 3.5% of the purchase price as a down payment (due at the closing of the loan), while many loan programs require a full 20%, which can save buyers between $30,000 and $50,000 depending on the purchase price of the home. The 3.5% down payment can be gifted so not to worry. Additionally, where many loan programs require exceptional credit, the Texas FHA loan program works with banks and provides a guaranty for each FHA loan issued to ensure that more buyers qualify. The guaranty gives the bank a little extra assurance that the loan will be paid and allows them to be a bit more lenient when it comes to the actual qualification process. The end result is that even some buyers with previous foreclosures or bankruptcies can apply and be approved for a Texas FHA loan.
Texas FHA Loan Limits
Borrowers applying for a FHA insured loan must have a minimum 580 FICO score. Compared to any other loan program, FHA is the easiest to qualify for, credit wise. Those whose mid-FICO scores are below 580 but not lower than 500 can still qualify for an FHA-insured loan as long as they have at least 10% to put down but, the approval could require more evaluation of creditworthiness.
There are maximum loan limits for loans issued against the Texas FHA loan program, so potential borrowers should check with their county limits before beginning their house hunting. The Federal Housing Administration works hard to ensure that regardless of where buyers are, they will be able to afford a modest home in their particular area, so the maximum loan limit is adjusted in areas which have a higher cost of living. $331,200 is a typical loan limit throughout Texas.
“I don’t have a large down payment, and have concerns about my credit”
Other detailed information to note: A down payment of 3.5% is required on all FHA transactions. If you don’t have these funds saved up a down payment can come from a family member as a gift towards the purchase of the house. The donor has to provide the source of the money being used as a “Gift Fund” to the borrower and gift letter will need to be signed. Texas Premier Mortgage will help facilitate this process to ensure all required paperwork is submitted.
The debt-to-income requirement allows the borrower to have a higher back-end ratio as compared to other loan programs. FHA will go as high as 55% DTI; no other loan program in the market subscribes to this rule but FHA. Texas Premier Mortgage can go as high as 57% back-end ratio to qualified borrowers.
Contrary to popular belief, credit alone does not guarantee a mortgage loan. Credit, in conjunction with, income and borrower’s assets determine affordability and the total home loan to be extended.
The Federal Housing Administration (FHA) insures the loan made by banks and other private institutions. The first thing that every prospective borrower needs to do is consult with an FHA approved lender. A FHA Home Loan Specialist will do an analysis of the borrower’s credibility and ability to pay back. This is a simple pre-qualification process. The borrower can take it one step further by opting to be pre-approved. This process will require documentation of income and assets required to move forward with the loan.
Texas Premier Mortgage can get an automated underwriting approval and go over the requirements and/or additional required documentation with the borrower. This will ensure that the borrower actually is approved per FHA guidelines.
FHA loan program in Texas offers borrowers many benefits. As of January 1, 2009, FHA loans require a 3.5 percent down payment. You can receive the down payment as a gift to you from family members or obtain it from other sources such as down payment assistance programs. In addition, the credit and income guidelines are more relaxed on an FHA loan. The program also limits the amount of closing costs you are required to pay.
The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934. FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance.
Call us direct at 281-907-6401 to see if FHA is the best option for you!