An FHA loan is a home mortgage that allows for a purchase or refinance with a low down payment. FHA will not disqualify a refinance on a property that has been recently listed as well. The FHA loan program is increasingly popular for borrowers with less than perfect credit to refinance a subprime loan which may be scheduled to adjust into an inexpensive, fixed rate FHA loan program. AN FHA loan will allow someone to qualify using non-traditional credit as well. Non-traditional credit items include rental history, electric, cable, phone, and gas bills. An FHA loan is a great program because a low credit score does not automatically disqualify you. A Federal Housing Adminisration (FHA) can be beneficial to many borrowers. An FHA loan is an excellent way to purchase a mult-unit dwelling as well. FHA allows for Owner-Occupied purchases of 2-4 unit properties with as little as 3 of the purchase price; AND gift funds are allowed for the entire down payment, closing costs and prepaid items. Seller-paid contributions for closing costs and prepaid expenses are allowed up to 6% of the purchase price. The borrower is not required to have any financial reserves. Recent FHA appraisal reform eliminated the need for minor cosmetic repairs to the property before closing. No minimum credit score. If the automated underwriting system does not approve your loan, the loan may be underwritten manually and the underwriter is given discretion to use common sense in the decision to approve the loan. Many loans for borrowers with credit problems have significant penalties for paying the loan off within the first 3-5 years. These penalties prevent refinancing for a lower rate or for debt consolidation. All these factors benefit both the buyer and the seller. Without this FHA program, the market for the seller's home would be greatly reduced. See www.efanniemae.com for the Geo Coder on loan limits.
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