August 1, 2014
There are a wide variety of options when it comes to the FHA loan program. Did you know you can buy or refinance a home using an FHA mortgage? You don’t have to have an existing FHA mortgage in order to refinance into an FHA mortgage, and for qualifying borrowers aged 62 or older the Home Equity Conversion Mortgage loan offered under the FHA loan program can also be an option.
For new purchase FHA home loans, borrowers have the option under the FHA single-family loan program to purchase a suburban home, a townhome, condo, duplex or other home classified as real property (no houseboats or motor homes).
FHA loans for new purchases require a minimum 3.5% down payment. This is non-negotiable, though borrowers are free to make a larger down payment should they choose to do so.
FHA loans may be offered by participating lenders in a fixed rate or adjustable rate mortgage. Adjustable rate mortgages can be later refinanced into fixed-rate mortgages using the FHA Streamline loan option which we’ll discuss below.
For refinance loan options, FHA offers cash-out refinancing, non-cash-out refinance, and FHA Streamline Refinancing. Cash-out refinancing always requires a new credit check and a new appraisal. Once the original FHA appraisal has been used to purchase the home, it cannot be re-used to get a refinance loan even if the appraisal is still technically valid at the time of the application.
FHA cash out refinancing is for any type of home loan. FHA Streamline Refinancing is only for existing FHA loans and has no FHA required credit check or appraisal in most cases. The lender is free to require one or both.
FHA Home Equity Conversion Mortgages are available for qualified borrowers aged 62 or older, and this program has changed a great deal in 2014. We’ll cover FHA HECM loans in detail in another blog post.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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