FHA Financing

Among my target group of real estate clients are first-time homebuyers and individuals looking to purchase condominiums. Both of these groups often use FHA financing for their purchases. I wanted to talk a little bit about what FHA financing is. An FHA loan is a mortgage loan that is issued by a federally qualified lender and insured by the Federal Housing Authority (FHA). FHA loans are typically issued to first-time homebuyers or others who may otherwise have difficulty purchasing a home. According to a November, 2009 survey by the National Association of Realtors, 39% of recent purchases nationwide were made with FHA financing.

The Federal Housing Administration was created by the National Housing Act of 1934. The main purposes of this program were to increase home production and decrease unemployment at a time when the economy was its most unstable point in our nation's history. Though it has gone through many changes since its inception, the FHA is today an important tool for providing affordable mortgage options for homebuyers. The advantages of an FHA loan include a low downpayment. There are different variations of FHA loans, but the most common is the fixed rate loan. According to the FHA website, www.fha.com, this fixed-rate loan 203(b) allows homebuyers to finance up to 97% of their total purchase price. The 203(b) home loan is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency.

A borrower who takes out an FHA loan with a down payment of less than 20 percent will be required to pay private mortgage insurance. The borrower will have to pay a 1.5% upfront mortgage insurance premium and will also be charged each month at a rate of .5% of the total loan amount. The individual will pay the private mortgage insurance until he or she has paid off 20% of the loan.

There are limits to how much you can borrow with an FHA loan. These are based on the type of property that is being purchased. According to www.FHA.com, the current maximum loan amounts for a single family home in Maricopa County is $346,250.

A condominium purchase is often done with FHA financing. In today's market, in order to finance or refinance a condo it must be either FHA approved or considered warrantable. In order to determine if a condo is FHA approved you can go to the FHA-approved condominium sight at www.hud.gov.

If you are interested in looking into purchasing your first home, a condo, or any home in Arizona for that matter contact me today at rbohr1@hotmail.com or call me at 602-478-7015. For more information about FHA financing you should contact a lender or go to www.fha.com. I can provide you with a list of qualified lenders who can provide you with valuable information.

Visit my website today at www.robbohr.com.

Sources:
www.fha.com
www.hud.gov