Here are some of the most common FHA questions.
How can FHA help me buy a home of my own?
An FHA insured mortgage offers many benefits and protections that only come with FHA:
FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a sub-prime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments.
An FHA fixed interest rate mortgage may be used to refinance a new or existing 1-4 family home, a condominium unit.
Are FHA rates higher than other types of mortgage loans out there?
No, in fact, they are often lower than similar conventional loans. Because the Federal government insures your loan, lenders are able to offer very competitive rates. FHA also doesn’t increase your rate based on your down payment, so you get the same rate whether you put 3% down, or 20% down. This is not the case with conventional financing.
Can the seller pay for my closing costs with FHA?
Do I have to be a first time home buyer to qualify for an FHA loan?
Absolutely not. Anyone is eligible for an FHA loan as long as the loan is on a primary residence. Even if you have had FHA loans in the past, you are still eligible for FHA financing.
Does FHA do down payment assistance?
At this time, the only way you can get assistance is through a gift of funds from family or a relative.
A new law was passed by Congress H.R. 3221, privately funded down-payment assistance (DPA) is eliminated as of October 1, 2008. Yes: There is an initiative the FHA Seller-Financed Down Payment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694), a bi-partisan bill introduced by Congressmen Green, Miller and Shays and Congresswoman Waters in July, would overrule this move and reinstate DPA indefinitely. These funds could have been used for first time and repeat home buyers. HUD does provide funding to state and local governments for this purpose. To find out what programs you may qualify for, please contact your city, county or state government.
My credit score is really low. How can I improve it?
There are many ways to go about improving your credit score. First you want to obtain a copy of your credit report. Often there are old on incorrect items on a credit report. Secondly you will want to look at balances on different accounts. Keep in mind by law debts have to fall off 7 years after they are placed on the credit report. You also want to limit the amount of times that your credit is pulled by creditors. Luckily, mortgage companies and automobile dealership inquiries are treated a little differently, so they do not impact your credit as much as some others like credit card inquiries. The other option to improve your credit is to remove the negative and incorrect items from your report. This is most successful when working with a credit repair company. These programs generally take between 45-90 days, and can have a significant impact on your credit score.