March 28, 2018
In our last blog post we discussed some basic FHA home loan options for those who want to buy or refinance a home. More FHA loan options for new and returning borrowers alike include FHA fixed-rate and adjustable rate financing, FHA condo loans, and more.
FHA Home Loan Interest Rate Options
FHA home loan interest rate options are not the same at all participating lenders. Depending on both your own personal financial qualifications and lender requirements, it may be possible to apply for a fixed rate 15-year or 30-year mortgage, or for an FHA Adjustable Rate Mortgage (ARM) in the same terms.
All FHA loans are generally required to amortize within the terms of the loan agreement and FHA loan rules. At the time of this writing, HUD 4000.1 states, “The maximum mortgage term may not exceed 30 years from the date that amortization begins. FHA does not require that mortgage terms be in five year multiples.”
FHA loan interest rates are negotiated between the lender and the borrower; your FICO scores and other financial qualifications will play an important role in the rates you are offered.
FHA Home Loan Up Front Mortgage Insurance Premiums
No matter which FHA loan you choose, (with certain exceptions made for qualifying tribal lands) the payment of an Up Front Mortgage Insurance Premium (UFMIP) is required. The amount of this premium will vary depending on a variety of factors, but FHA borrowers have the option of financing the UFMIP into the loan without affecting the borrower’s maximum loan amount.
FHA Reverse Mortgage Options
Qualifying borrowers aged 62 or older who either own or are very close to owning their homes outright can apply for an FHA reverse mortgage to cash in on the value of their property. FHA reverse mortgages have no monthly payment and come due and payable when the borrower stops using the property as the primary residence, dies, or sells the home.
These mortgages require counseling for all who are to be obligated on the loan to insure all parties fully understand their rights and requirements for an FHA reverse mortgage. Reverse mortgages are available as fixed rate or adjustable rate mortgages and the amount of cash you receive at or after closing time may depend on which type of interest rate you apply for.
FHA Condo Loan Options
Yes, FHA borrowers have the option to purchase condos on or added to the FHA’s approved condo project list. There are additional requirements for FHA condo loans because of the shared nature of the property; borrowers cannot be restricted in any way when it comes to their ability to sell the property or have the loan assumed.
FHA condo loans may require the lender and borrower to work together to get a property added to the FHA approved condo project list, or the property may already be approved by the FHA.
In any case, the same general credit score requirements, loan repayment history, debt ratios, and other financial qualifications will apply the same for FHA condo loans as they would for other types of property.
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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