November 16, 2018
If you want to buy real estate with an FHA mortgage in 2019, there are several things you can do to get ready for a successful loan application and closing date. One of those preparations? Learning what you can and cannot buy with an FHA home loan.
FHA Mortgages In 2019: Your Real Estate Options
Many published reports speculate that in 2019, house prices will begin to come down and areas where the real estate environment is considered a seller’s market may begin to shift toward the borrower again. What kind of real estate inventory you have access to depends on the housing market where you want to live, but there are some things you should know about your home loan options before you decide to start looking.
Namely that FHA mortgages are for owner/occupiers and you cannot purchase a home with an FHA loan that you don’t intend to live in yourself. You can buy a home with as many as four living units, but you’ll be required to live in one of them (at the minimum) as a condition of loan approval.
FHA home loans can be used for properties that are classified as real estate, so any qualifying townhome, condo, manufactured home, or modular home that meets FHA minimum standards can be potentially approved for a mortgage.
You can buy split-level homes, duplexes, even a mixed-use property that meets FHA requirements and does not overwhelm the residential nature of the home with non-residential use.
Buying A Home In 2019
You may discover that certain aspects of buying a home with an FHA mortgage are given greater emphasis in 2019 depending on the nature of the housing market.
Those house hunting in parts of California will need to take a closer look at hazard insurance for fires, mudslides, and other issues. Borrowers applying for real estate loans in Texas and parts of the east coast will need to look at their hazard insurance options also, for much different reasons.
FHA home loans permit mortgages within certain types of hazard zones, but some special natural disaster hazard areas may automatically disqualify an FHA loan application. For example, certain FHA loan transactions are not possible when the following conditions apply:
- A residential building and related improvements to the Property are located within SFHA Zone A, a Special Flood Zone Area, or Zone V, a Coastal Area, and insurance under the National Flood Insurance Program (NFIP) is not available in the community; or
- The improvements are, or are proposed to be, located within a Coastal Barrier Resource System (CBRS).
Sellers may be eager to make a deal in the earliest parts of 2019 thanks to predictions that house prices may start falling in the new year-part of the cycle that goes with rising prices that hit their peak at a given time and start to come back down to earth again.
It may be harder for home owners to sell at their original price later on, and borrowers who don’t mind haggling can capitalize on this.
It’s never a good idea to assume the prices or conditions of your home purchase are not subject to change or negotiation; buyers and sellers have several options that can be beneficial to both parties; if you can’t agree on a price you may be able to convince the seller to compensate in other ways such as seller-funded closing costs (within FHA limits).
Ask your loan officer about such options and what you may be able to work out as a bargaining point depending on lender standards, state law, and other local factors.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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