Do You Know The Benefits of FHA?

With the subprime implosion and liquidity issues the market is currently experiencing, guess what is fast becoming popular again? That's right, the original "blue collar" loan program, FHA.

The issue...many originators have not originated one for years or even worse; have never done one at all. Yet, with all the recent changes made to the program over the last two years and FHA Reform appearing as if it will pass in Congress later this year, it's mission critical you learn and have access to FHA programs at your company...even in California (more regarding The Golden State in a later post).

With that being the case, I'm going to start an FHA series over the next few weeks.

On countless occasions, I've been asked by originators and Realtors across the country what the benefits of doing an FHA loan are?

There are many advantages to providing an FHA solution to a borrower including:

1. Flexible Debt to Income Ratios of 31/43. Note: Loans decisioned by the FHA Mortgage Scorecard may allow significantly higher ratios than FHA published ratios.
2. Lower down payment generally in the range of 1.25% to 2.75%. The lower down payment requires a minimum cash investment of 3% which may be a combination of down payment and allowable closing costs.
3. Seller may pay ALL of buyer's Closing Costs. Or they may be paid through "premium pricing."
4. Seller financing concessions/contributions can be up to 6% of the sales price.
5. Cash reserves are not required. The only exception is for 3 & 4 unit properties; then 3 months PITI (principal, interest, taxes and insurance) is needed.
6. Gift Funds - All funds can be gifted if coming from an approved source.
7. Loans are assumable to a qualified individual. FHA loans are assumable with a credit review and approval of the prospective buyer.
8. Down Payment Assistance Programs (DAPs) are available.
9. There is no pre-payment penalty.
10. FHA loans are not credit score driven; there is no minimum FICO requirement.
11. Citizenship is not required. 
12. There is an allowance for non-occupying co-borrowers.
13. Up-front Mortgage Insurance Premium (MIP) may be financed.
14. Borrower may be eligible for a "Streamline Refinance" to reduce rate and payment.
15. No First Time Homebuyer Education required.
16. One of the best ARM products available.