FHA Loans - Pros and Cons

Benefits

Low downpayment (3%)
Seller can pay all recurring costs
No cash reserves
100% Gift is OK
Liberal debt to income ratios 35/45
Credit doesn't have to be perfect
Buyers don't have to be 1st time homebuyers
Co-signers are okay
"Streamline" refinancing available with no debt-to-income qualifying or income verification

Drawbacks

Maximum loan amounts range from $144,000 to $261,609 depending on county.
Condo & PUD's must be FHA approved
Borrower can only have one FHA loan
Mortgage insurance required for first 5 years of loan


FHA LOAN FACTS

GOALS:
FHA provides affordable home loans for purchase or refinance

OCCUPANCY:
Owner-occupied properties only - NO INVESTOR LOANS (except streamline rate reduction refinancing of an existing FHA loan, HUD Repo's, or 203K).

PROPERTY TYPES:
Single family, FHA approved Condo and PUD's, 2-4 units

TERM:
30 year fixed rate, 15 year fixed rate, adjustable and buydown programs available.

BUYER QUALIFICATIONS:
No limit on age of buyer or property
No income or sales price limits
Borrowers must have a valid Social Security Number and picture I.D.
Borrowers must meet usual loan qualifying criteria such as income, job, and credit guidelines
Borrowers can have only one maximum ratio FHA loan at a time
Co-borrowers on loans are permissible