Real Estate Guide

Your Mortgage - Questions and Answers
'Federal Housing Administration'

• How does FHA work?
• Rules for a FHA Loan?
• Which lenders offer FHA loans?
• What are rates for FHA and VA loans?
• Do FHA loans require impound accounts?
• Are FHA loans assumable?
• Are there government programs for rehab?
• How do you find government-repossessed homes?
• Do you have to buy HUD homes through a realty agent?
• Can I get a HUD home for as little as $100 down?
• Can I Get A 100% FHA Loan?

How does FHA work?

The U.S. Department of Housing and Urban Development offers a variety of loan insurance programs through the Federal Housing Administration which require approximately 3 to 5 percent cash down. FHA loan limits vary depending on the state and county where the property is located. FHA loans administered by HUD are originated by private lenders. For more information, contact lenders who offer FHA loans or a regional HUD office.

Resources:

• "FHA Forms, Booklets and Publications," U.S. Department of Housing and Urban Development Printing Branch, Room B-100, 451 7th St., Washington, DC 20410; call (800) 767-7468.
• "Let FHA Help You"
• FHA.com. An FHA refinance mortgage or FHA loan allows for the refinance or purchase of a home with a low down payment. These loans are great for the first-time homebuyer.

Rules for a FHA Loan?

The U.S. Department of Housing and Urban Development offers a variety of loan insurance programs through the Federal Housing Administration, with the following general specification:

• No income requirements to qualify for a FHA mortgage but the borrower must meet standard FHA credit qualifications.
• Although there is no set credit score bench-mark, a borrower's debt-to-income ratio is very important.
• The borrower can finance the upfront mortgage insurance premium into the loan, but remains responsible for paying the annual mortgage insurance premium.
• Requires a 3.5 percent down payment. Money for the down payment can come from nearly any legal source (parent gifts, HUD assistance grants, state and local grants, etc.)
• Closing costs are typically 3 percent of the total purchase price and may be paid by the seller. They can also be included in the monthly payments.
• FHA loans do not contain prepayment penalties
• In some cases FHA loans are assumable by qualified purchasers.
• Eligible properties are one-to-four unit structures.
• FHA Limits by FHA.com
  FHA loan limits vary, depending on the state and county where the property is located. (In Trumbull, Mahoning, and Columbiana Counties, Ohio - Single Family Limit = $271,050)
• The FHA 203(k) Program is available for home rehab. The borrower can purchase or refinance the property and include the cost of repairs and improvements in the loan.
• FHA actually lends no money, it simply insures the mortgage  originated and serviced by a private bank, savings and loan, mortgage company or other FHA-approved lender against loss should you default on the loan.
• Rates and points are not set by FHA. The lender determines interest rate and points, so it is best to shop around by calling several FHA-approved lenders.
• FHA refinance loans are available to help people with sub-prime high interest mortgages lower their monthly payments.

Which lenders offer FHA loans?

Lenders who handle Federal Housing Administration loans typically advertise in the Yellow Pages under "real estate loans" and in the real estate sections of newspapers. FHA also supplies limited lists of approved lenders.

For general qualifications and program details in the Mahoning Valley See >>,

• Creekside Mortgage , Boardman, Ohio
• Home Loan Mortgage Co., Youngstown Ohio

What are rates for FHA and VA loans?

There are no set interest rates for FHA and VA loans. The FHA stopped regulating rates in 1983 and the VA followed suit soon after. Shop around for the best rate.

Do FHA loans require impound accounts?

Yes, according to the "Realty Bluebook," 32nd Ed., Dearborn Financial Publishing, Chicago; 2000:

"Under FHA financing it is the lender's responsibility to ascertain that property taxes and hazard insurance premiums are paid when due. Lenders, therefore, will insist that the monthly payments include proportionate amounts for taxes and insurance."

Are FHA loans assumable?

Lenders will only permit those loans that have a "subject to transfer" clause to be taken over through a formal assumption process. Look to your loan agreement for specific terms. In addition, you should candidly discuss any risks with your lender, and possibly consult an attorney before signing the final agreement.

 Are there government programs for rehab?

See >> Real Estate Guide: Your Mortgage - Fixer-upper Loans, Loans For Re-hab

How do you find government-repossessed homes?

See >> Home For Sale - Foreclosures

Do you have to buy HUD homes through a realty agent?

You can only purchase a U.S. Department of Housing and Urban Development property through a licensed real estate broker. HUD will pay the broker's commission up to 6 percent of the sales price.

RE/MAX Valley Real Estate is a HUD licensed real estate agency. You may contact any RE/MAX Valley Associate for assistance in placing a 'bid' on any HUD owned home currently listed for sale in the State of Ohio, subject, of course, to the rules and contingencies that HUD may place on any individual listing.

Can I get a HUD home for as little as $100 down?

In an effort to increase the affordability of homeownership, the Federal Housing Administration (FHA) is announcing sales incentives on purchases of HUD Homes in Ohio. These incentives available on HUD homes sold to owner occupant purchasers with a minimum sales price of $25,000. The incentives have been extended beyond September 30, 2008 until further notice.

Find the list of available properties online

Fix up your HUD Home with the FHA 203(k) Program. For those properties that require fixing up, FHA has a loan for rehabilitating and repairing properties called the Rehabilitation Loan program or 203(k). You can get just one mortgage loan which includes the mortgage and the cost of repairs combined.

	Learn more about the 203(k) program
	Find an active FHA 203(k) lenders in your area

Can I Get A 100% FHA Loan?

Strictly speaking, no. However, there are loans available from agencies such as the  Nehemiah Community Development Corporation and Ameridream, Inc. - Down Payment Assistance Program that tie FHA loans with seller assistance that, in effect, yield a 100% loan. If your credit is good enough to qualify for an FHA loan, you will generally be able to qualify for a Nehemiah or Ameridream financed loan.

Note: As of 10/1/2008, HUD no longer permits DPA programs such as described above to participate in FHA insured loans or Fannie Mae and Freddie Mac finances loans. There is, however, legislation currently before our congress that would reinstate these programs.  (See: Real Estate Guide: Your Mortgage; No Money Down Loans)