June 1, 2019
FHA Mortgages: Lower Down Payment Requirements And Not Just For First-Time Home Buyers
FHA loans require 3.5% of the adjusted value of the home as a down payment unless your credit does not meet the loan program requirements or lender standards. Borrowers with FICO scores of 580 or higher technically qualify for the lowest possible down payment but you will need to check lender requirements since they are not the same from one financial institution to another.
FHA Mortgages: Down Payment Assistance IS Permitted
You can get help from family, friends, employers, or other third parties-they can provide gift funds for the down payment. FHA loan rules say you can only get down payment help from those with no financial stake in the outcome of the transaction. ALL down payment funds must be properly documented according to FHA and lender requirements.
Down Payment Assistance Comes From Local Agencies And Not The FHA
The FHA guarantees the mortgage loan. It does not lend you money, and does not provide down payment assistance. Down payment programs open to you would be the ones you find in your local area.
Your Payment Record Counts When The Lender Is Trying To Approve Your Loan
A borrower’s repayment history is an important part of home loan approval. How important?
If you make 12 months of on-time payments on all financial obligations, you may find the lender more willing to work with a lower FICO score. Don’t apply for a loan without at least 12 months of on-time payments on your record for best results.
An Up-Front Mortgage Insurance Premium Is Required
…but you can finance this into the loan if necessary. Ask your lender about this aspect of your loan as your mortgage payments will be affected by the extra amount you include in the loan.
But FHA mortgage loans allow the borrower to finance the FHA Up-Front Mortgage Insurance Premium (UFMIP), reducing out of pocket expenses up front.
Financing of the UFMIP is permitted for both first-time home buyers and repeat borrowers. If you are a repeat borrower buying a primary residence with an FHA mortgage you are allowed to finance the UFMIP in the same manners as the first time buyer.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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