Home Loans Arizona - California - Nevada - Utah

The FHA (Federal Housing Administration) home loan can be the best program to purchase a home with a buyer that has a limited credit profile and/or a down payment.

The program is not just for first time homebuyers, this program is just right for many home buyers. There is no income limit to the FHA program, an individual making over $100,000+ a year can qualify utilizing this program. As well as a buyer with a middle credit score below 620, where the traditional Conventional home loan program requires a buyer to have a credit of a 620 or higher. The limitation to the program is the loan amount, the limit is set in each county you are looking to purchase a home in.

Other benefits include, down payment assistance to help bridge the gap of the required 3.5% down payment. The down payment assistance can be a gift with no repayment at all, but the vast majority of the DPAs are a silent second lien on the property that will need to be paid back with an agreed upon contract. The down payment assistance program that I like working with here in California is the CHDAP program, this program has more flexibility than any other DPA loan program offered here California. 

The FHA home loan program also offers 2 excellent programs that allow a homebuyer to rehabilitate the property with a FHA 203K loan and the EEM (Energy Efficient Mortgage) to improve the overall appearance of the home.

The FHA 203K is a program that allows the homebuyer to take up the county loan limit to improve the property. Example, if you are looking to purchase a home and the county loan limit is $355,350 (this is what it is in San Bernardino and Riverside county) and the home is priced at $300,000 because it needs some work, you purchase the home for $300,000 which needs about $35,000 to bring the property up to your standards, you may able to tap into those funds. The FHA 203K is one loan, not 2 separate ones, the home must appraise for the additional funds, so you purchase the property for $300,000 and the appraiser values the home at $320,000, then there is only $20,000 worth of repairs you can make to the home. You must also qualify for the additional funds, meaning if you are pre-approved to purchase at $350,000, you can not purchase a home at $350,000 and then be able to obtain other $35,000 for rehab cost, you will need to purchase at $315,000 plus the $35,000 is $350,000.

The other rehab loan that FHA has to offer that is also one loan, is the EEM (Energy Efficient Mortgage). This program allows the home owner to improve energy rated items in the home such as: windows, doors, air conditioner unit, hot water heater, solar panels, wall and attic installation and heater unit. The best part about this program is that you do not have to qualify for the additional funds, which is 5% of the appraised value, example: purchase a home for $300,000 times 5% which is $15,000, image what you can do with $15,000 in home repairs. In addition, the appraisal does not need to appraise higher for the extra money like the FHA 203K loan program has to. So if you are looking at a home that meets all your needs but requires a little home repairs, think EEM.

The FHA home loan program has a lot of benefits for the 1st time homebuyer (1st time is someone who has not owned or been on title of a home in the past 36 months) as well as 2nd and 3rd time buyers. Also, after having a short sale or foreclosure you can purchase a home after 3 years of the property coming out of your name and 2 years for the discharge date of a having a bankruptcy, you will still need to meet all the current FHA underwriting guidelines to be able to qualify to purchase a home, but the FHA guidelines are little more laxed than the Conventional home loan program.

I welcome the opportunity to speak with you about how diverse the FHA loan program is and see if this program meets all your needs when purchasing a home here Rancho Cucamonga California.

by Nathan Rufty