First Time Home Buyers
First Time Home Buyers – When you apply for the FHA mortgage program, the First Time Home Buyer will receive the very best service and the utmost in respect to make you a proud American Homeowner. Once you apply your FHA Loan Officer will guide you along the path of homeownership. First time home buyers represent a large share of the lending market and they receive a lot of attention. Many do not have established credit histories or a lot of money to put down for a downpayment (because they are usually fresh out of college or still early in their careers). Currently, FHA loans require a 3.5% down payment to obtain financing and have different loan limits in each county. Apply now to obtain more information about the limits and downpayment requirements in your area with Envoy Mortgage. The FHA Mortgage might just be the answer for your home mortgage.
Credit score – One of the primary market benefits of an FHA loan has always been that credit scores were not as large of a factor in regards to rates. A borrower with great credit scores could definitely have their loan approved more easily, but someone with some credit problems can still get approved – provided they had a well documented common sense explanation for their credit problems and could show that the problem had been resolved. In spite of not relying solely on credit scores, FHA foreclosure rates went down while conventional mortgage foreclosure numbers went up in spite of their almost excessive reliance on credit scores. The FHA underwriter will evaluate the entire credit profile to determine the borrower’s likelihood of repayment. Past credit issues may be overlooked if new credit has been re-established. Also, other compensating factors may apply. Generally a credit score of 620 is needed for automated approval. If the credit scores are less than 620 we can look at ways of increasing the scores. After reviewing the credit report a loan officer can tell which collections have a great amount of hurt to the credit score and can run a simulator to see which balances can be paid down to increase the credit scores.
Little or No Money Needed – You can however receive a gift from a family member for the 3.5% down payment. FHA loans allow the seller to pay up to 6% of the sales price toward the closing costs assuming there is room in the appraised value of the home. The only out of pocket fees the buyer will have are the earnest money (normally 1% of the sales price), the cost of the appraisal ($450).
Non-occupying co-borrower allowed – FHA is currently the only mortgage that allows for a non-occupying relative to co-sign the mortgage. The non-occupant’s income and assets can be used for qualification purposes. This is generally used for parents to help their children buy a home. The name for this is the “kiddy condo loan”. This is also a way for the parents to buy an investment property to keep in the family.
Property types – 1-4 unit, condos, town homes, modular homes, and manufactured homes.
No cash reserves required – Unlike most conventional loans, FHA does not require you to have cash reserves on 1-2 unit properties. A borrowers profile is graded on an FHA score card. The FHA score card takes into consideration income, assets, job tenure, debt to income ratio’s and credit scores. Having reserves can help strengthen the overall credit profile.
Housing History – FHA does not require a rental or other housing history if it is not available.
Bankruptcy okay – Chapter 7 bankruptcies are allowed if discharged over 2 years ago (or 1 year with extenuating circumstances). Chapter 13 bankruptcies are allowed with a minimum of 1 year of on time plan repayment and trustee approval.