FHA home loans offer first-time home buyers an advantage with low down payment requirements, more flexible lending standards, and the ability to apply for local down payment assistance help where offered (as long as that assistance meets FHA requirements).
Do you have questions about the FHA home loan process as a first-time buyer? Some of these answers below may help.
What Is An FHA Forward Mortgage?
The term “forward mortgage” refers to any home loan used to buy a property. It’s also sometimes known as a purchase loan.
Why Are Closing Costs Due At Closing Time And Why Can’t I Finance Them Into My Home Loan?
Not all closing costs must be paid in cash at closing time-the FHA Up-Front Mortgage Insurance Premium is an example of an FHA home loan expense that can be financed instead of being paid at closing time. But some closing costs cannot be financed under FHA home loan rules (and/or lender standards depending on circumstances). These must be paid in cash at closing as required in HUD 4000.1, the FHA loan handbook for Single Family Mortgages.
Do I Have To Live In A Home Purchased Or Refinanced With An FHA Mortgage?
Yes. Occupancy is a requirement for at least one of the borrowers obligated on the mortgage.
Can I Apply For A Bigger FHA Home Loan And Get The Unused Portion In Cash At Closing Time?
You cannot do this with any FHA forward mortgage. The only cash back to the borrower allowed for these transactions is in the form of legitimate refunds.
Can I Use An FHA Mortgage Loan To Buy The Apartment Building I Am Currently Renting?
FHA loan rules do permit such transactions, but certain rules may apply for down payments and other considerations. You will need to discuss such a transaction with a participating lender to see what lender requirements, state law, and FHA loan regulations will apply in such cases.
Do I Need To Pay Private Mortgage Insurance On An FHA Mortgage?
FHA home loans do not require private mortgage insurance but do require FHA mortgage insurance premiums which will, depending on the amount of the down payment, duration of the loan, and other factors, be charged for 11 years or the lifetime of the mortgage loan.
Do I Have To Meet Certain Requirements For an FHA Loan like Having A Financial Need Or A Maximum Income Cap?
FHA loans are not need-based, do not require you to be a first-time borrower, or have income restrictions. Any financially qualified borrower can apply for an FHA mortgage even if you have owned a home before or are a repeat borrower.