Articles Tagged With: Down Payment

July 31, 2019

FHA Home Loan Down Payment Rules: Cash To Close Sources

FHA home loan down payment rules include requirements for the sourcing of funds used to make that down payment and/or provide cash to close the deal. Down payment funds and sources of cash to close must be properly documented by the lender to insure the cash does not come from unacceptable sources such as non-collateralized loans (payday loans, credit card cash advances, etc.) or in the form of “gift funds” that are not really gifts but have an expectation of repayment. When discussing the permitted sourcing of FHA home loan down payments or cash to close, many borrowers want to know if certain kinds of sources are acceptable to the lender. That can include proceeds from the trade-in of a manufactured home, the proceeds from the sale of real estate, | more...

July 10, 2019

FHA Home Loan Down Payment Assistance

By Joe Wallace

The down payment is one of the daunting things for first-time home buyers-coming up with the cash to put the minimum required 3.5% (of the adjusted value of the home) may seem like an uphill task, but fortunately the FHA loan program guidelines permit the use of approved down payment assistance programs. These programs are not offered by the Department of Housing and Urban Development; potential borrowers will need to seek out these down payment assistance programs in their local area. The rules the FHA provides to organizations wishing to offer down payment assistance includes the requirement that down payment gifts or grants must not come with an expectation of repayment. They also include the requirement that such funds be properly sourced and transferred to the borrower. But FHA rules | more...

June 20, 2019

FHA Construction Loan Facts

By Bruce Reichstein

Some borrowers, including some first-time home buyers, don’t want to buy someone else’s house. They prefer a home built to suit; real estate built from the ground up using borrower-approved plans. This kind of home loan is available as an FHA mortgage from participating FHA lenders. It is called an FHA One-Time Close construction loan and it is an excellent alternative to buying an existing construction house. What do you need to know about FHA One-Time Close Construction Loans? For starters, these loans do not have a different down payment requirement than other FHA mortgages-the same low down payment options exist for borrowers with qualifying FICO scores. Your lowest possible down payment on a home built using an FHA construction loan is the same 3.5% as other FHA mortgage options. | more...

June 19, 2019

How Much Is My Down Payment With An FHA Mortgage?

By Joe Wallace

Many buyers want to know how much their FHA loan down payment requirement is. The answer is not as easy as quoting a percentage since there are variables that can affect the amount of the down payment you will be required to make. FHA Loan Down Payment Basics There is no fixed dollar amount for the down payment-each transaction will have its’ own required down payment amount based on the calculation below. The lowest down payment you can make with an FHA mortgage is 3.5% of the adjusted value of the home. There are circumstances where a higher down payment is required because a borrower’s FICO scores don’t qualify them for maximum financing. In those cases, FHA loan rules dictate that where a borrower’s FICO scores are between 500 and | more...

April 28, 2019

HUD Announces Changes To Down Payment Assistance Rules

By Bruce Reichstein

The Department of Housing and Urban Development and the FHA have issued a Mortgagee Letter announcing changes to the rules for down payment assistance. FHA loan program rules permit the borrower to get assistance with the minimum required down payment-this assistance can come in the form of gift funds from family or friends, money from employers, or even down payment assistance programs. Government entities are permitted to provide such down payment help, too. In all cases, the down payment assistance must meet FHA loan requirements. Gifts cannot be loans in disguise; there must be no expectation of repayment of a gift of down payment funds. And now, thanks to revisions to the rules governing these issues in HUD 4000.1, government entities must meet certain requirements when providing down payment funds. | more...

April 25, 2019

FHA Loan Down Payment And Closing Costs

By Bruce Reichstein

The FHA home loan program has been described in other publications as being “the mortgage program first-time home buyers love”, but many people worry about closing costs and down payment requirements. How do you pay for FHA home loan closing costs and the down payment? The key is to first understand what these expenses are. FHA Home Loan Origination Fees and Other Closing Costs FHA home loans, like many other mortgage loan products, permit the lender to charge a loan origination fee. These fees will vary from lender to lender and it’s best to contact the lender directly to learn how much the origination fee might be. There may be other closing costs in addition to the ones mentioned below including expenses related to hazard insurance, compliance inspections, flood zone | more...

March 8, 2019

FHA Home Loan Down Payment Assistance Rules You Need To Know Now

By Joe Wallace

FHA home loan rules allow down payment assistance for the mortgage for both first time buyers and experienced house hunters alike. There are down payment assistance programs for first-time borrowers, there are down payment gift funds that can be provided by family, friends, or employers…but all of these are subject to FHA loan rules. FHA Home Loan Down Payment Assistance Rules HUD 4000.1 says down payment assistance cannot come from any entity or party that has a stake in the outcome of the home loan sale or the approval of the mortgage loan. That includes: -The seller of the Property; -Any other person or Entity who financially benefits from the transaction (directly or indirectly); or Anyone who is or will be reimbursed, directly or indirectly, by any party included in | more...

January 29, 2019

Should I Buy A Condo With An FHA Home Loan?

By Bruce Reichstein

Should a first-time home buyer consider purchasing a condo unit? Depending on your wants and needs, the answer may vary. Condos are unique compared to suburban homes because they are a communal property with shared responsibilities (which may be mostly financial) for upkeep of the common areas, the roof, balconies, etc. You may have special features on the property such as a gym, sauna, whirlpool, etc. depending on the property. FHA Condo loans require the condo project to be on or added to the FHA approved list-that’s unlike other types of property which must simply pass the FHA appraisal process. Condos will be appraised, too, but they must first be on the FHA roster. You can work with your FHA loan officer to add a condo project to that list | more...

January 3, 2019

FHA Loan Down Payment Rules For 2019

By Bruce Reichstein

FHA home loan down payment requirements are lower than other mortgages, and depending on circumstances your down payment commitment on an FHA mortgage could be even less thanks to down payment assistance programs and seller contributions to closing costs. FHA Home Loan Small Down Payments Elsewhere on the internet you will find writing about down payment requirements for purchasing a new home, discussing why borrowers are choosing one approach or another regarding the money they put down on the home. Conventional mortgages require private mortgage insurance (PMI) unless the borrower makes a higher down payment. A 20% down home loan transaction is not uncommon in cases where the borrower wants to avoid paying PMI. FHA home loan rules in HUD 4000.1 require mortgage insurance premiums, too, but borrowers looking to | more...

November 19, 2018

FHA loans: A Mortgage For First-Time Home Buyers

By Joe Wallace

While it should be pointed out that FHA mortgage loans are not restricted to those who have never owned a home before, it’s also good to note that FHA mortgages are an excellent choice for first time buyers since they won’t be required to buy homes with 20% down. Low- and no-downpayment mortgages are obviously an advantage to the first time home buyer; how does an FHA mortgage help these borrowers? Verify Your FHA Loan Eligibility All mortgage loans have eligibility standards; FHA, Fannie Mae and Freddie Mac, rural housing loans guaranteed by the USDA or even the 100% loans offered to qualifying veterans (VA loans) guaranteed by the Department of Veterans Affairs all have financial eligibility requirements. And all of these loans have minimum program guidelines that may or | more...