FHA Home Purchase

The FHA Home Purchase Program was created to expand home ownership and help more borrowers realize the American dream. This FHA program is very popular with first time homebuyers including other types of borrowers due to its lenient underwriting guidelines and low down payment options.

Why is the FHA Purchase So Great?

The FHA Home Purchase Program is one of the easiest purchase loans to qualify for based on the underwriting process allowing for compensating factors. For example a high credit score, low debt to income ratio, or even assets can help offset negative factors on your application. A lender may even consider other types of payment history like rent or utilities when making a decision on an approval. This common sense type of underwriting can make the difference when it comes to getting approved for your new home loan.

What Are the Advantages of An FHA Purchase?

  • 3.5% down payment
  • Competitive interest rates
  • Up to 50% debt to income ratio
  • Allows for 6% seller paid closing costs
  • Easy to use gifts for down payment and closing costs
  • Allows for non-occupying co-borrowers to help qualify

What Are the Requirements?

  • Primary residence only
  • Minimum credit score 600
  • 2 year steady work history

What About Mortgage Insurance?

When you purchase a home using the FHA program you will be required to pay monthly mortgage insurance as well as upfront mortgage insurance which will be financed into your new loan.

Your monthly mortgage insurance will be 1.35% and 1.75% for the upfront mortgage insurance

HUD REO $100 Down Program

With the recent financial crisis the options for buying a home with no or low payment have been virtually eliminated. Luckily there is a program that can help you buy a HUD home using the HUD REO $100 Down Program. A HUD home is a property that has been foreclosed on that was previously insured by the FHA (Federal Housing Authority). The homeowner failed to make their payments and the lender foreclosed on the property. HUD then reimburses the lender for the losses and then HUD takes ownership of the property, eventually listing it for sale to the public.

What Are the Advantages?

  • $100 down payment
  • No appraisal needed
  • Flexible approval process
  • Allow for repairs up to $5K

What Are the Requirements?

  • Primary residence only
  • Minimum credit score 600
  • Pre-approval letter to make offer

What About Mortgage Insurance?

When you purchase a home using the HUD REO $100 down program you will be required to pay monthly mortgage insurance as well as upfront mortgage insurance which will be financed into your new loan.

Your monthly mortgage insurance will be 1.35% and 1.75% for the upfront mortgage insurance

Frequently Asked FHA Purchase Questions:

What are the documents I will need?

  1. Copy of driver’s license
  2. Copy of social security card
  3. Two most recent pay stubs
  4. Two years of W2′s or tax returns
  5. Two most recent asset statements
  6. Contact information for insurance agent

Who is eligible to buy HUD home?

Any borrower that can qualify for a mortgage may buy a HUD home. Purchasers are required to have a pre-approval letter from the lender when making an offer.

Will HUD pay any of my closing costs?

Yes they can, HUD can pay up to 3% of the sales price.

Which properties are eligible for the HUD REO $100 Down Program?

Properties that are listed as FHA approved homes that are 203B, 203B with repair escrow and 203K are eligible for this program.

How does the repair escrow for HUD homes work?

The amount of the repair work up to $5K with be financed into the new loan and held in escrow. Once the work is completed by the borrower or the contractor an invoice or receipts are submitted to lender be reimbursed dollar for dollar.

Will I have to get an appraisal?

Typically HUD homes that are for sale have an appraisal that is already attached to the property so in many cases a new appraisal will not be required.