January 19, 2018
Do you need to know how to use an FHA home loan? There are many things you can do with an FHA mortgage, or an FHA refinance loan. Some of your options include buying a home with more than one living unit, refinancing an existing loan to do rehab or repair work, and including energy-efficient upgrades into your new mortgage.
Use An FHA Home Loan To Buy Your First Home
FHA home loans are not specifically targeted at one type of buyer, but first time home buyers enjoy the lower down payment requirements and more lenient FHA credit requirements.
First time home buyers may learn early that the FHA home loan program isn’t strictly for first homes, but that the participating lender has some kind of first-time buyer incentive. This is dependent on the lender, and there may also be state/local assistance program for first time buyers to take advantage of.
Use An FHA Loan To Buy A Second Home
Yes, you can own property and apply for a new FHA home loan to purchase a home. The caveat is that any home purchased with an FHA mortgage must be a primary residence and not a vacation home, time share, or other “occasional occupancy” type property.
You will be required to certify that the home to be purchased with the FHA loan is to be your primary residence as a condition of loan approval.
Whether you are buying a first home or not, FHA loan rules permit the purchase of residences with as many as four living units, giving the borrower the option to rent out the unoccupied units. As mentioned above, the occupancy requirement applies in such transactions.
Use An FHA Loan To Refinance Your Existing Mortgage
There are many reasons why you might want to refinance your existing mortgage with an FHA loan. One option is to apply for an FHA 203(k) rehab loan, which can refinance the mortgage and help pay for upgrades and repairs.
The FHA 203(k) can be used together with an FHA Energy Efficient Mortgage option to add more funds to the loan for approved energy-efficient upgrades or improvements.
If your current loan is an FHA mortgage, you can also refinance strictly to get into a lower monthly payment or interest rate with an FHA Streamline Refinance. Streamline loans have no FHA-required credit check or FHA requirement for a new appraisal. It will be up to your lender to determine whether these are needed for your transaction.
FHA Streamline refinance loans usually must result in a lower interest rate, lower payments, or must have the borrower moving from an Adjustable Rate Mortgage to a fixed rate loan. Ask your lender about FHA Streamline Refinancing to learn more about how this type of refinance loan can help your monthly budget.
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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