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Frequently Asked FHA Questions
Is FHA financing
complicated?
Years ago, FHA financing was more complicated than conventional
financing. However changes over the years have streamlined the
FHA loan process and in many cases, FHA home loans are easier than
conventional financing.
Who qualifies for a
FHA home loan?
The program is open to virtually everyone. There are a few
restrictions placed upon credit and residency that may preclude
someone from obtaining a FHA home loan.
Is it true that the
down payment can be gifted?
Yes. Current FHA guidelines permit a relative, a
governmental agency, or approved non-profit organization to gift the
borrower's down payment. A gift, according to HUD, is just
that--a gift. HUD does not permit the borrower to repay the
gift as a stipulation of giving the gift.
What is the minimum
amount of money I need to buy a home with a FHA mortgage?
The National Housing Act requires the minimum cash investment to
be 3 percent of the sales price. Even though the actual down
payment may be less than 3 percent, the balance would go towards the
borrower's closing costs. In the event that there are no
closing costs, the down payment would be increased to 3
percent.
I have had a
bankruptcy in recent years. Can I get a FHA loan?
Generally a bankruptcy will not preclude a borrower from
obtaining a FHA loan. Ideally, a borrower should have
re-established a minimum of two credit accounts (such as a credit
card, car loan, etc.) and wait 2 years since the discharge of a
Chapter 7 bankruptcy or have a minimum of 1 year of repayment with a
Chapter 13 (the borrower must also seek permission of the courts to
allow this). Furthermore, the borrower should not have any
late payments, collections, or credit charge-offs since the
discharge of the bankruptcy. If a borrower has suffered
through extenuating circumstances (such as surviving cancer but had
to declare bankruptcy because the medical bills were to much),
special exceptions can be made (rarely). Is
the upfront mortgage insurance premium negotiable?
No. In order to cover some of the costs incurred by HUD
for FHA loans, they must assess the upfront and monthly mortgage
insurance to the home buyer. This upfront fee may ranges from
2.0% to 2.25% (depending upon the term of the loan) and the borrower
will have to pay 0.5% annually in mortgage insurance premiums.
However, if you are buying a condominium, you do not have to pay the
upfront mortgage insurance premium. How
long does it take to receive my MIP refund?
Generally, it takes approximately four to six weeks to receive
your MIP refund if you have sold your home and paid off an existing
FHA home loan or refinanced your FHA mortgage to another mortgage
other than FHA. If you refinance your property to another FHA
loan, a MIP refund credit will be applied to the balance you owe
against the home at the time of closing. Former FHA borrowers
who think they might be due a refund can call a toll free number, 1-800-697-6967,
or write HUD at P.O. Box 23669, Washington DC 20026-3699. Or you can
look for your name with the HUD
Refund Search Form
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