The federal government’s Federal Housing Administration (FHA) guaranteed loans are one of the best ways for first homebuyers to get a home. Their programs are a little more flexible in seller, family financial contributions, and underwriting standards than Fannie Mae or Freddie Mac loans. A nice thing about FHA loans is that family members can give you the down payment and closing costs to help you get a home. For them to do this, they have to write a letter stating that the funds are a gift and the source must be verifiable. For instance, if Aunt Josie wants to lift you the down payment she has to write a letter to the lender on her pink stationary saying the funds are a gift and sign it. Second, the funds should be in her bank account so that the lender can verify they exist.
The FHA site. Check out
FHA loan programs and informative
home buying information
at
www.hud.gov. You can
also look up the loan limits
for your state and county.
The FHA gets very upset if the sellers try to slip the buyers a kickback so that they can buy the home with nothing down. This is called loan fraud, and it’s a federal offense. There are however, two limiting areas with FHA loans. One is low loan limits that vary from county to county in each state. And second, mortgage insurance of approximately one-half percent is added to the interest rate on all FHA loans, regardless of down payment.
In reality, many homebuyers get a home with a low down FHA loan and then refinance with a conventional program when they can create enough equity to drop off the mortgage insurance. One interesting FHA loan is its 203(k) program. This option allows you to buy a fixer-upper and combine the fix-up costs and purchase price into one 30-year loan. If you’re handy in the building trades or have relatives you can tap, this can be a great way to get a first home.
The FHA site. Check out
FHA loan programs and informative
home buying information
at
www.hud.gov. You can
also look up the loan limits
for your state and county.
The FHA gets very upset if the sellers try to slip the buyers a kickback so that they can buy the home with nothing down. This is called loan fraud, and it’s a federal offense. There are however, two limiting areas with FHA loans. One is low loan limits that vary from county to county in each state. And second, mortgage insurance of approximately one-half percent is added to the interest rate on all FHA loans, regardless of down payment.
In reality, many homebuyers get a home with a low down FHA loan and then refinance with a conventional program when they can create enough equity to drop off the mortgage insurance. One interesting FHA loan is its 203(k) program. This option allows you to buy a fixer-upper and combine the fix-up costs and purchase price into one 30-year loan. If you’re handy in the building trades or have relatives you can tap, this can be a great way to get a first home.
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