FAQ

Here is a list of some of the most common questions we get asked:

Can I get down payment assistance?

At this time the only a gift can come from a relative.

A new law was passed by Congress H.R. 3221, privately funded down-payment assistance (DPA) is eliminated as of October 1, 2008.

There is an initiative the FHA Seller-Financed Down Payment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694), a bi-partisan bill introduced by Congressmen Green, Miller and Shays and Congresswoman Waters in July, would overrule this move and reinstate DPA indefinitely. As of this moment it has not passed and the elimination of programs such as Nehemiah which would allow for a gift funds from the seller up to 6% towards your down payment and/or closing costs have taken place. These funds could have been used for first time and repeat home buyers. HUD does provide funding to state and local governments for this purpose. To find out what programs you may qualify for, please contact your city, county or state government.

How can I improve my credit score?

There are many ways to go about improving your credit score. First you want to obtain a copy of your credit report. Often there are old on incorrect items on a credit report. Secondly you will want to look at balances on different accounts. The credit bureaus like to see the amount owed on a debt at 60% of the max limit or less. Keep in mind by law debts have to fall off 7 years after they are placed on the credit report. You also want to limit the amount of times that your credit is pulled by creditors. Luckily, mortgage companies and automobile dealership inquiries are treated a little differently, so they do not impact your credit as much as some others like credit card inquiries. The other option to improve your credit is to remove the negative and incorrect items from your report. This is most successful when working with a credit repair company. These programs generally take between 45-90 days, and can have a significant impact on your credit score.

How can FHA help me buy a home?

An FHA insured mortgage offers many benefits and protections that only come with FHA:

• Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
• Less than Perfect Credit: You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.
• Low Down Payment: FHA loans have a low 3.5% down payment and that money can come from a family member.
• FHA Can Help You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.

FHA fixed interest rate mortgages cost less. FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a sub-prime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments.

You don’t have to have perfect credit to get an FHA fixed rate mortgage. Even if you have had credit problems, such as a bankruptcy, you may still qualify for an FHA mortgage. Should you encounter hard times after refinancing your home, FHA has programs to help you keep you in your home and avoid foreclosure.

An FHA fixed interest rate mortgage may be used to refinance a new or existing 1-4 family home, a condominium unit.

Are FHA rates higher than conventional rates?

No, in fact, they are often lower than similar conventional loans. Because the Federal government insures your loan, lenders are able to offer very competitive rates. FHA also doesn’t increase your rate based on your down payment, so you get the same rate whether you put 3% down, or 20% down. This is not the case with conventional financing.

Does FHA allow for seller paid closing costs?

FHA will allow the seller to pay up to 6% of the purchase price toward the buyer’s closing costs. This is called a seller’s concession. Most conventional loans only allow a 3% concession.

Do I have to be a first time home-buyer to qualify for an FHA loan?

Absolutely not. Anyone is eligible for an FHA loan as long as the loan is on a primary residence. Even if you have had FHA loans in the past, you are still eligible for FHA financing.