May 4, 2015
A reader asks, “Would I apply for a FHA loan if I was looking for a Disability low interest loan? I am trying to find out for my nephew. Were confused by the wording and there seems to be very little information out there surrounding this benefit.”
“I am told you need as little as $500 down but cannot find out whether some or all of the closing cost can be financed in the loan. Thank you in advance for your response. He just attended the counseling seminar but no one there was able to answer my questions. I was the only one there seeking this type of loan so maybe there is not as much need to know about this type of loan.”
The FHA single-family loan program does feature interest rates that are often lower than conventional 30-year mortgages, but this program does not specifically feature a “low interest disability loan”.
FHA home loan interest rates are negotiated between the borrower and the lender, the FHA does not set or regulate the interest rates beyond requiring them to be “reasonable and customary” as described in HUD 4155.1 compared to similar loans of this type. Borrowers qualify for interest rates based on their FICO scores and credit history–the interest rates offered to one borrower may not be available to another if credit and FICO score factors vary.
FHA loan down payments require a minimum 3.5% of the appraised value of the home. These is no fixed dollar amount for the downpayment as it is calculated based on that value. Additionally, some borrowers who may have marginal FICO scores or credit history issues may be required to make a larger down payment depending on the lender’s standards and other circumstances.
Certain loan expenses may, depending on the nature of the FHA loan and other circumstances, be included in the mortgage loan amount, but the down payment amount is firm and cannot be financed. FHA home loans are for all financially qualified borrowers. There is no advantage to being a first-time home buyer, and no disadvantage for being a second-time buyer or borrower. All parties who are to be obligated on the mortgage loan must go through a credit check, income verification, etc.
Borrowers who need assistance with FHA home loan details or want help with pre-purchase planning should contact the FHA directly at their toll free number: 1-800 CALL FHA. Ask for a referral to a local HUD/FHA approved housing counselor who can help with such issues.
Do you have questions about FHA home loans? Ask us in the comments section.
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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