FHA Loans: A Good Idea for First-Time Buyers?

FHA Loans Idea

Want to purchase your first home? Interested in buying a fixer-upper? Are a senior who already owns a home in need of financial assistance? Need help financing a mobile home or improving the energy efficiency of your home?

If you answered yes to any of these questions you may able to get the help you need from an FHA loan.

First Time Home Buyers

If you’re a first time home buyer, you may be able to get 203 (b) mortgage insurance, one of the most popular programs offered by the FHA.

As a first time home buyer, you may find yourself having a hard time convincing lenders to invest in you since you have no proven track record. You can make it much easier for lenders to trust you by getting the FHA to back you up with 203 (b) mortgage insurance.

This gives the lender something to fall back on should you fail to make your payments.

To be eligible for 203 (b) mortgage insurance, the home you are purchasing will have to be your primary residence and you must meet standard credit qualifications set by the FHA.

You must be eligible for approximately 96.5% financing and be able to afford an annual premium on your insurance. The residence you are purchasing must be a one-to-four unit structure. Specific mortgage limits may apply based on your geographic region.

Fixer-Uppers

Sometimes the house you are interested in buying is a fixer-upper in need of repairs. If this is so, you can again have a rough time with lenders since they would prefer not to lend you the money until the repairs have been accomplished.

Naturally though unless you own the home, you can’t repair it, so that leaves you in quite a quandary.

The FHA has an answer to this dilemma called program 203 (k). 203 (k) will insure your home loan and even help you to finance the costs of the repairs themselves.

If you do choose to do this you’ll need to be able to furnish a down payment of 3.5% or so.

Reverse Mortgages for Seniors

If you are a senior and you own your own home, the FHA can help you to take advantage of something called a FHA 255 reverse loan.

If you are in need of cash and own significant (or total) equity in your home, you can liquidate your equity into cash by getting a reverse mortgage. Some uses for this cash might include health expenses, basic living expenses, or just financial security.

To participate in the FHA’s program, you’ll need to be 62 or older and either own your home completely or have very little balance left on your mortgage. The home must be your primary residence.

Energy Efficient Mortgage Program

Tired of paying high utility costs? The Energy Efficient Mortgage (EEM) program by the FHA can help you to improve the energy efficiency of the home you’re in, or help you to make improvements to a home you are purchasing or refinancing.

This can be a great way to save some money in the long run!

Mobile and Manufactured Housing

Don’t want to live in a traditional home? There are two different programs available through the FHA which can help you to finance a mobile or manufactured home.

One program is geared toward those who own the land which the home will be located on and the other is geared toward those who will be living in mobile home parks.

If you are a first time home buyer or are purchasing a fixer-upper, the FHA can help you to persuade lenders that you’re worth their risk. Senior citizens can benefit from the reverse mortgage program to liquidate their assets, and anyone who meets the guidelines can get financing for a mobile home or for energy efficiency improvements to a new or existing home through the FHA.