FHA loan related programs
Whether you're a first time buyer or a veteran, the more you know about buying a home mortgage, the easier it will be. The hardest part is knowing what to expect and where to begin. At fhaloan.org, we can provide you with guidance on the process and your options, so you can focus on finding the home of your dreams.
The FHA insures your loan so that lenders can offer you better, more affordable rates. Whether you live in a single parent household or a multi-parent household, the FHA can help you purchase a home or remodel a home you are looking to purchase. FHA programs can even help you make home repairs or energy-efficient improvements. Apply Now!
FHA 203K Loan
The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.
203(k) program can help you and allow you to purchase or refinance a property plus include in the loan the cost of making the repairs and improvements. The FHA insured 203(k) is available nationwide and is for anyone wanting to occupy the home.
The down payment requirement for an owner-occupant is approximately 3% of the acquisition and repair costs of the property, however seller concession are allowed to lower this percentage.
The 203(k) loan includes the following steps:
- A homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with their real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
- The homebuyer then arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.
- The appraisal is performed to determine the value of the property after renovation
- If the borrower passes the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.
- At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
- The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.
- Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property
FHA Streamline Loans and Refinances
Streamline Refinances are great ways to reduce interest rates and lower monthly payments on existing FHA mortgages with out incurring costs. They are termed "streamlined" because the relative lack of hassle or paperwork.
Other benefits of choosing a Streamline Refinance is that appraisals, credit checks, income verification, or employment verification are usually not required and out-of-pocket costs are minimal, and possibly zero.
There are two types of FHA Streamline Refinancing:
- The refinance can include the closing costs into the new mortgage loan, which can happen if the property has sufficient equity, which requires appraisal. This option offers the best rate.
- The "no-cost" refinance offers no expenses or cost to the borrower. This refinancing requires no appraisal, and the new loan amount cannot exceed what is currently owed. The lender pays the closing cost. No appraisal is needed for investment properties in which the borrower does not reside.
FHA Loans for Condominium Units
FHA Condominium Loans are specifically geared toward those who purchase housing units in a condominium building. Condominium ownership, in which separate owners of individual units jointly own the development's common areas and facilities, is for some a very popular alternative to home ownership. Insurance for this type of housing is provided through FHA Section 234(c).
FHA Loan Down Payment Grants
AmeriDream
The AmeriDream program offers gift funds up to 10% of the home's purchase price which do not have to be paid back. Buyers must agree to return any funds that are not used toward down payments or closing costs and to return the funds if the sale of the home does not close on the scheduled closing date.
Nehemiah
The Nehemiah program is a Private California Non-Profit Organization that offers down payment assistance programs to qualified first time and repeat homebuyers. This program offers free gift funds to be used toward down payments and closing costs for homes purchased.
HART
The Housing Action Resource Trust (HART) Program is a 501c(3) non-profit Housing and Community Development corporation that helps potential homebuyers purchase homes by offering down payment assistance programs to those with low and moderate incomes.
Consumer Debt Solutions,Inc.
Depending on the seller's contribution toward a home purchase, Consumer Debt Solutions, Inc. (CDS) can gift up to $10,000 of the final sales price of a home. Since all the money awarded is in the form of gift funds, none of it has to be paid back.
Partners in Charity
The Partners in Charity (PIC) is a non-profit corporation that offers financial assistance through programs for qualified low and moderate income homebuyers. Down payment and closing cost assistance is provided as gift funds from 2% to 10% of the home price..
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