How FHA Benefits Buyers , Sellers , and Brokers
By Rick Tobin
Since 1934 , FHA
has insured over 34 million home mortgages nationwide . For buyers , sellers , and advising real estate brokers or other licensees , they should all learn more details about how the use of FHA mortgage loans can help each of them to buy and sell properties at potentially a faster and more profitable pace today .
Easier Mortgage Underwriting Guidelines for FHA Loans
Because FHA mortgages are insured by the federal government in case of future default or foreclosure risks , mortgage lenders are more likely to offer much easier loan approval requirements for their interested borrowers . Let ’ s take a look below at some of the best FHA mortgage loan benefits that include :
● Loantovalue loan amounts up to 96.5 % LTV for owneroccupied properties .
● FICO credit score allowances as low as 580 for some lenders up to 96.5 % LTV loans .
● Sellers , family members , and other interested parties may be able to contribute up to 6 % of the sales price towards closing costs , prepaid expenses , discount points , and other financing costs or concessions to greatly reduce total outofpocket cash contributions for the buyer .
● Borrowers who invest at least 10 % towards a down payment may qualify with a FICO credit score as low as 500 in some cases .
● Debttoincome ( DTI ) ratio limit allowances that may exceed 50 % for borrower applicants .
● Interest rates for FHA loans are usually priced at or better than the most attractive interest rates for loans that aren ’ t governmentinsured , which allows borrowers to qualify for much larger loan amounts .
● Maximum loan amount limits for one unit ($ 765,600 ), two unit ($ 980,325 ), three unit ($ 1,184,925 ), and four unit ($ 1,472,550 ) properties are much higher now in 2020 than most people realize .
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