FHA

The FHA plans to make it tougher for borrowers to refinance a loan and take out cash as the agency tries to "limit its exposure to undue risk," according to a letter that recently went out to lenders. Starting with loan applications that lenders receive April 1, the FHA's new policy limits cash-out refis to borrowers with at least 15 percent equity in their homes.

VIDEO: What is FHA financing?

NAR: Media shouldn’t say buyers need 20 percent downpayments

WASHINGTON – Jan. 6, 2009 – Don’t believe everything you read, says NAR.

There is some misinformation in the media lately about the required size of a downpayment for a mortgage in today’s market, and the blog world is abuzz with misperceptions. Not all so-called experts are knowledgeable in this area, and some experts are being misunderstood.

The facts:

1. An individual may be required to put down 20 percent based on that person’s financial situation – but that is not an across-the-board requirement for all borrowers.

2. A borrower who puts down less than 20 percent is required to obtain mortgage insurance.

3. Even in a declining market, a borrower is required to make at least a 5 or 10 percent downpayment.

4. FHA requires a 3.5 percent downpayment by borrowers, so long as they meet a 31 percent housing cost-to-income ratio. In other words, anyone who stays within their budget and who can afford a 3.5 percent downpayment (even with family help) can become a homeowner.

FHA market share has grown roughly tenfold in the past year to an estimated 30 percent of new mortgage originations.

WHAT IS AN FHA LOAN?

WHAT IS AN FHA LOAN?

The Federal Housing Administration (FHA) was established in 1934 to improve housing standards and conditions and to provide an adequate home financing system through insurance of mortgages. Families that would otherwise be excluded from the housing market were finally able to buy the homes of their dreams.

DID YOU KNOW?
During the 1940s, FHA programs helped to finance military housing and then homes for returning veterans and their families.In the '50s, '60s and '70s, FHA helped to stimulate the production of millions of units of privately owned apartments for elderly, handicapped, and lower income Americans. When soaring inflation and energy costs in the 1970s threatened the economic viability of thousands of private apartment buildings, FHA's emergency financing kept cash-strapped properties afloat.When a deep recession prompted private mortgage insurers to pull out of oil producing states in the 1980s, FHA moved in to stabilize falling home prices. During the difficult '80s, FHA programs made it possible for potential homebuyers to get the financing they needed.

In the more than 60 years since inception of the FHA, a great deal has changed and Americans are now arguably the best housed people in the world. FHA has contributed substantially to that achievement.

Today, FHA is particularly important to minority and first-time homebuyers. With the National Homeownership Strategy in place since 1995, FHA has placed a great deal of emphasis on marketing and outreach to minorities and first-time homebuyers.

IMPROVING URBAN NEIGHBORHOODS
In 1995, FHA piloted the Safe Neighborhood Action Plan (SNAP) in 14 urban communities to improve life in HUD-assisted project areas. With volunteers from the AmeriCorp Volunteer Service, the SNAP initiative is focused on eliminating drugs and crime in high-risk urban areas. SNAP has also provided after-school programs and other organized activities for project residents.

FHA has also fostered Neighborhood Network Centers in rental projects to help community residents become more self-sufficient and employable. The Centers provide opportunities to assisted housing residents for learning computer job skills. Many Centers have tutors from local colleges and area businesses and operate with locally donated computer equipment.

FHA LOAN PROGRAM: IMPORTANT FACTS

FHA LOAN PROGRAM: IMPORTANT FACTS

Learn about the details that can make this the right plan for you. The FHA program will let you purchase a home with a low down payment and flexible guidelines. With no income limits or credit scoring, many people who can afford the monthly mortgage payments and have reasonable credit will qualify for an FHA mortgage.This section allows you to find the FHA mortgage limits for a variety of housing types in your state or county.[ - more on FHA lending limits - ]

The FHA defines allowable closing costs that may be charged to the borrower. These costs are determined as reasonable and customary by each local FHA office.[ - more on FHA closing costs - ]

FHA insured mortgages require mortgage insurance. Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages.[ - more on FHA mortgage insurance - ]

According to FHA guidelines, borrowers and / or their spouse must qualify according to set debt ratios which are used to determine whether the borrower can reasonable be expected to meet the expenses involved with home ownership.[ - more on FHA debt to income ratios - ]

FHA will analyze a borrower's past credit performance in determining the loan for approval. A borrower who has made timely payments serves as a guide and demonstrates their willingness to repay future credit obligations.[ - more on FHA credit issues - ]

Before you start the loan process, you'll need to have some information at hand for all loan applicants. In addition, you will need to pay for a credit report and appraisal of the property.[ - more on FHA loan checklist - ]

FHA DOWN PAYMENT GRANTS

FHA DOWN PAYMENT GRANTS

Down payment assistance and community redevelopment programs offer affordable housing opportunities to first-time homebuyers, low-income and moderate-income individuals and families who wish to achieve homeownership.

The AmeriDream, Inc. program is designed to provide downpayment assistance to low and moderate income homebuyers who demonstrate the need for financial assistance. To use their program, Buyers must purchase a home enrolled in The AmeriDream downpayment Gift Program and qualify for a mortgage.[ -more on AmeriDream Program- ]

The Nehemiah program is a Private California Non-Profit Organization that offers down payment assistance programs to qualified homebuyers. This programs offers free gift funds to be used towards the down payment and closing costs for eligible FHA loan programs.[ -more on Nehemiah Program- ]

The Housing Action Resource Trust (HART) program is a California 501 c (3) Non-Profit Housing and Community Development Corporation that promotes homeownership by offering down payment assistance programs to qualified low and moderate income homebuyers.[ -more on HART Program- ]

The Partners in Charity (PIC) is a non-profit corporation that promotes homeownership by offering down payment assistance programs to qualified low and moderate income homebuyers. This programs offers free gift funds to be used towards the down payment and closing costs for eligible FHA loan programs. [ -more on Partners in Charity Program- ]

With the Family Home Providers Program, those with an FHA loan or who pre-qualify for an FHA home loan may be eligible for 3% of the final contract price of the home. The home must appraise for the sales contract price or more, and the seller pays closing costs.[ -more on Family Home Providers Program- ]

Futures Home Assistance is a non-profit charity group which offers a down payment gift up to 6% of the closing costs of a home purchased with an FHA loan. You may be eligible for additional funds beyond the usual 6%.[ -more on Futures Home Assistance Program- ]

Genesis Program, otherwise known as Grant America offers down payment assistance to low and middle income home buyers including those with an FHA loan or pre-approval for an FHA home loan. Grant America offers up to $34,000 in down payment assistance for new or resale homes.[ -more on Genesis Program- ]

Newsong provides down payment assistance for purchases of both residential and commercial properties. The program features a one-time gift to cover all closing costs, and those who qualify for an FHA loan are eligible to apply for Newsong.[ -more on Newsong Program- ]

The Responsible Home Ownership program is operated the non-profit Community Housing and Development Corp. The Responsible Home Ownership program offers down payment assistance specifically to low-income individuals who have steady income and good credit.[ -more on Responsible Home Ownership Program- ]

The Quickdown program works together with non-profit agencies to offer down payment help for home buyers with approved or pre-approved FHA home loans. Quickdown is designed for first-time home buyers who can't afford to buy a home without down payment assistance.[ -more on Quickdown Program- ]

American Family Funds runs a non-profit charity called The Dove Foundation. This charity offers down payment and/or closing cost assistance to home buyers with FHA home loans and to those pre-approved for FHA loans.[ -more on American Family Funds Program- ]