FHA Facts

As always, Ben Lang Properties is Oakland County and Macomb Counties #1 source for real estate news and statistics.  Home buyers, are you considering purchasing a home but don’t know much about FHA financing?  Continue to read Ben Lang Properties FHA Facts article for more information and helpful hints on FHA financing…

Ben Lang Properties would like to take a moment and provide Oakland County home buyers and Macomb County home buyers about some recent updates and financing ideas.

Let’s first start with FHA financing!

FHA has extended their 2010 maximum loan amounts into 2011.  The tri-county area single family maximum loan amount will remain $297,500.  This loan amount makes the vast majority of the housing inventory eligible for FHA financing.  Why is this important for Metro Detroit home buyers?  FHA is much more aggressive in its’ lending policies.  Here are the major differences:

• In some instances, FHA allows credit scores as low as 620 and in all instances 640 (with conventional loan at least 660 credit score is needed).
• FHA only requires a 3.5% investment (conventional loan requires 5%) from the borrower and all of that can be a gift from a family member (conventional loan must have 5% of your OWN money).
• Additionally, FHA does NOT require any reserves (conventional requires at least two months reserves).
• FHA will allow the seller to pay up to 6% toward closing costs (conventional on a 5% down loan ONLY allows 3% from the seller).
• FHA qualification ratios are much more aggressive some as high as 57% (conventional 5% down is only 41%) – Debt to income ratio.
• You do not need to be a first time home buyer and income or geographic restrictions aren’t applicable to FHA financing.
• FHA has decreased their upfront mortgage insurance premiums from 2.25% to only 1%.
• FHA condo financing requires the project to be on their approved condo list (the majority of condos are on this list).  Spot approvals were eliminated a year ago.  Check with HUD’s approved condo list.

FHA also has a great rehab program called 203k.  The 203k program allows the home repairs to be financed and the closing to take place WITHOUT the repairs being completed.  Rates and fees are comparable to the standard FHA program. The 203k program can be a tremendous asset as many homes are bank owned and without kitchens, in need of roof repairs or just in need of major updating.  All of this can be financed at historically low interest rates!

Conventional Financing

FHA financing has many attributes, but low down payment conventional financing still has its place.  If you are a home buyer with a real strong credit score and 5% down from your own savings, pmi companies (Private Mortgage Insurance Companies) have a great single premium mortgage insurance program.  This program allows the home buyer to finance the insurance in their loan amount and NOT have it in their payment!  This will not only lower a home buyer’s monthly payment, but may be the different in qualifying for that loan amount!  Additionally, conventional financing can assist in financing the condos not on the FHA approved list.

We at Ben Lang Properties, hope the above is helpful and can assist you in pursuing the process of purchasing an Oakland County or Macomb County home.  If you have any additional questions or would like more information on types of financing, please feel free to contact Ben Lang Properties today!

For more information on your local real estate market, or if you are a first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Macomb County and Oakland County Realtor, complete Ben Lang Properties contact form to have a real estate agent contact you!

Ben Lang Properties specialize in selling Oakland County Real Estate.  Troy Realtor selling Metro Detroit real estate, working with Keller Williams Realty in Troy Michigan.  See what past clients have to say about Ben Lang.  Working with short sales and foreclosures in this challenging real estate market to get the best deals for home buyers.

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This entry was posted on Tuesday, January 25th, 2011 at 4:32 pm and is filed under First Time Home Buyer, Home Buyer, Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.