Frequently asked FHA Mortgage Questions

Can my closing costs be built into my mortgage when BUYING a home?
The answer is...YES, but only if the seller agrees to do a SELLER CONCESSION. A seller concession, put simply allows the seller of a property to pay for the buyers closing costs by increasing the negotiated sales price of the home. Example: you found a home that you love and have agreed to buy the home from the seller for $300,000. Alongside the purchase price, your total costs to close (attorney fees, mortgage broker fees, title charges etc.) total about $10,000 making your total costs $310,000. Now normally the buyer will pay these closing costs out of their pocket, separate from the loan, but with a seller concession, the seller will agree to increase the sales price of the home from the already negotiated price of $300,000 by an additional $10,000 (the amount of your closing costs); making the new sales price of the home $310,000. The additional money the seller receives will be applied to your closing costs. In order to perform a seller concession the seller must agree, the bank must allow for a seller concession, and the property one is buying must appraise for the additional amount.

What does an FHA insured mortgage do for me?
An FHA mortgage loan can offer many great opportunities to current and future homeowners. For homeowners seeking to refinance, FHA mortgage loans allow you to do so up to 97% of the homes appraised value. Many homeowners also benefit from FHA mortgage loans because of the low fixed rates they offer. FHA's low fixed rates have greatly assisted homeowners who are struggling with increasing adjustable mortgage loan payments. Closing costs are generally lower than those of conventional mortgage loans and the loan process is generally faster, requiring less paperwork than a conventional loan. For those interested in buying a home with an FHA insured mortgage, prospective home buyers will only be required to put a down payment of 3.5% of the sales price of the home. The down payment can be a gift and the closing costs (which are usually lower than those of conventional mortgages) can even be financed in the mortgage loan. Purchasing a home that needs repairs can be done with ease as you can borrow the money that you need to do the repairs to the home in the same mortgage at the same low fixed rate.

I plan to refinance my home, but my husband has terrible credit and unpaid judgments. If I am the only one on the loan will his credit and judgments negatively affect the chance of my loan getting approved?
If you are not filing jointly for the loan, then his credit should not be a factor in approval.

What constitutes a first time home buyer?
One of FHA's highest priorities is to assist home buyers with the purchase of their first home. FHA tracks the number of first-time buyers assisted by our programs. Consequently, it is very important that the information is entered accurately in FHA Connection. In order to help lenders properly identify first-time home buyers, we are clarifying the definition of what constitutes a first-time home buyer. A first-time home buyer. is an individual who meets any one of the following criteria:

• An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time home buyers
• A single parent who has only owned with a former spouse while married. An individual who is a displaced homemaker and has only owned with a spouse.
• An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
• An individual who has only owned a property that was not in compliance with State, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.

Can a gift of equity from the seller be used toward the down payment of a purchase of a single family home on a FHA loan? They can if the lender is made aware of what is going on. If not, you are tricking the lender.
If you had a deed-in-lieu of foreclosure on a FHA loan four years ago, is it possible to qualify for a FHA loan?

Can you have more than one FHA loan?
You may only have one FHA loan at a time. Therefore you have to do a simultaneous close or sell first and then buy.

Do you have to be a first-time home buyer to obtain a FHA loan? I have purchased and sold a home prior to now, but did not use FHA financing. Am I allowed to use it on my second home?
No. Though part of the original design and intent of the FHA program was for first time home buyers, the program is open to anyone wanting to purchase a home. However closing costs are more expensive on an FHA loan so you may want to look into both options. We are currently selling our home to someone who is obtaining a FHA loan to purchase our house.

I have heard that FHA is extremely strict on the criteria that have to be met. Is this true? What can I expect as the seller?
In today's market, the documents and criteria needed to qualify for a FHA loan is very similar to that of conventional loans. There are some differences in the paperwork the buyer must sign and minor appraisal issues but for the most part a buyer has just as much, if not more of, a chance to qualify for a FHA loan. FHA loans have less restrictive qualifying guidelines, making it easier fir a wider array of people to qualify for the loan. Click here to read about FHA Qualification Guidelines.

What determines the interest rate for a FHA loan?
The rates are usually the same across the board for FHA loans. Whether you have a 620 fico score or a 720, everyone gets to benefit from the same low fixed rates FHA offers. However, if your score is below a 620 you qualifying interest rate may be adversely impacted depending on which lender you go through.

If the seller's contract states the home is to be sold as is and the buyer is financing through FHA, and the house inspection shows repairs are needed in some areas, does the seller have to make those repairs before financing can be finalized?
No. It is not the seller's responsibility to make sure the home is in condition to be financed through FHA. This will have to be worked out between the buyer and the seller before closing, but generally speaking the buyer is going to have to cover the repairs.

Once you get an FHA loan, is there a certain length of time you have to keep the house before you can re-sell it?
No, there is not a certain length of time that you must keep the house. FHA loans do not normally have a pre payment penalty.

What is FHA Secure?
FHA Secure is an FHA home loan program that helps homeowners with adjustable rate mortgages, who had a history of on-time mortgage payments but missed payments when their rate reset,refinance to a low fixed rate. The FHA is on target to insure more than a quarter of a million FHA Secure home loans in the Year 2009. Click here for FHA Secure Information.

Click here to qualify for a FHA mortgage with no personal information required.