FHA is Leading the Way
Because the days of putting little to nothing down for a mortgage are behind us, more buyers are rediscovering FHA loans. These government insured loans were designed to increase home ownership and it now a leading option for many looking to buy in a tight credit market.
The main benefit of FHA is that you only have to put 3.5% of the sales price down – and that can even be a gift from a family member. No cash reserves are required and the seller can credit up to 6% of the sales price toward buyer’s costs. That means on a $200,000 house, you would only need to put down around $7,000 if you qualify for an FHA loan.
“I recently worked with a couple that used FHA to buy their first home,” said Brentwood TN Realtor Jeff Fulmer (www.jefffulmer.com). “During the process, I discovered that the FHA process has become much easier and can be a good fit for many buyers in today’s market.”
A common misconception is that FHA loans are only for first time home buyers, but most people can qualify. There is no minimum FICO score or credit score requirements and FHA will allow a home purchase 2 years after bankruptcy and 3 years after a foreclosure. You can have less than two years on a job and self-employment is allowed.
“A couple of years ago, it was rare for me to see a client utilize the FHA loan,” Jeff Fulmer said. “My area is Brentwood TN homes and Franklin TN homes and buyers here typically did not need a program like FHA. But, I think that is changing. Whether you are talking about a client looking at a Franklin TN condo or a 4,000 square foot home in Brentwood, people are looking for alternative financing.”
Limits on FHA mortgage loans have increased to almost $400,000 in Davidson and Williamson Counties in Tennessee. In addition, previously stringent appraisal guidelines have loosened so that sellers no longer to fear the FHA buyer. While the rate on an FHA may be one-eighth of a point higher than other loans, the added cash at closings may be well worth it.
“We are all looking for the best way to help people get into homes or condos,” Fulmer said. “FHA is just another tool to help that dream come true.”
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