August 17, 2017

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FHA Mortgages: Loan Basics For 2017

FHA loan down paymentFor those who are weighing their real estate options in 2017, an FHA home loan can be an important option. Compare the down payment and interest rates on FHA mortgages with their conventional counterparts and it’s easy to see why many borrowers opt for an FHA mortgage.

FHA loans, like most mortgage loan programs (with the exception of VA home loans, which are in general available only to qualifying military members), require a down payment which is usually 3.5% of the adjusted value of the property.

Your down payment is required above and beyond other closing costs, mortgage insurance, etc. and must come from approved sources such as savings/checking accounts, the proceeds from cashed-in investments, cash saved at home, etc.

Your down payment cannot come from payday loans, credit card cash advances or other non-collateralized loans.

FHA home loans require that the borrower be free to sell or dispose of her/his property at any time after loan closing. This means that condo loans cannot include restrictive covenants or “rights of first refusal” applicable to the borrower that would limit the ability to sell.

FHA mortgages require that the home to be purchased with an FHA mortgage have an “economic life” that extends for the duration of the mortgage.

The idea behind this is twofold. The borrower’s investment should be sound enough to allow the owner to sell the property at any point after loan closing, and the lender’s interest in the property as the mortgagee must be protected. FHA loan rules require the property to meet minimum standards and be up to state/local building code.

Borrowers may find first-time home buyer programs with a specific lender or in a particular housing market. This can be a huge help to first-time buyers, but it’s important to know that the FHA loan program itself does not favor first time buyers specifically, nor does it penalize those who have previously owned a home looking to purchase with an FHA mortgage.

Speak to a loan officer to learn what FHA loans might work best for you based on your financial needs and goals. There are fixed rate loans, adjustable rate mortgages, energy-efficient FHA mortgages, and much more.

About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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