FHA loan

[yadayadadude]

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I'm a soon-to-be-resident and I've got house fever. Properties in our area have been pretty hard hit and I think we'll be able to afford a small house. But, of course, we don't have a 20% down payment, so I'm wondering if an FHA loan might work. We can probably put down 10-15%. Are there any residents who have used an FHA loan? Specifically, how does the work history requirement work? And does anyone know how much the required insurance cost? Is it similar to PMI?

 

[boho]

Hi,

Try talking to banks in your area. For example Chase Mortgage told me for employment requirement for FHA the fact you were in school is enough for them, and giving an evidence that student loans differed for 12 months will take care of student loan payments counting in your debt ratio.

If you have 10 percent down you may get smth other then FHA. Some banks will loan with 10 % down.

 

[Sol Rosenberg]

Yeah, with 10-15% down, you can get a conventional loan. If you get an 80/10/10 or an 80/15/5, you can avoid PMI (but have to pay a higher interest rate on the second lien (~1 - 1.25%) and usually a marginally higher interest rate on the first lien (1/8 - 1/4%)) You are not in FHA territory.

But, to answer your question, I believe that the FHA Mortgage insurance is about the same cost as PMI, but you get some of it back when you payoff the mortgage. The way to figure the amount that you get back is buried in government bureaucracy, so your time is probably better spent doing other things that trying to calculate/estimate it.

Most lenders will want something like 1-2 months paycheck history. You'll probably need to provide your contract as well.

 

[yadayadadude]

Hm, I hadn't considered that we might have conventional loan options. Is that true even given the fact that we'll be buying in a declining market? Is the conventional loan preferable to the FHA? Lower interest rate, I gather, but is that the principle benefit?

Thanks much, guys. Obviously, I'm just starting to think about all this. Until recently, buying wasn't really an option for us, but apparently real estate is on clearance where I live.

 

[dragonfly99]

I think that with 10-15% down you would likely do better with a conventional loan. I'll bet you can get someone to lend to you...you should at least check it out. I have to do FHA because I only have 3-5% to put down. The FHA loans I think tend to have a little higher fees...my understanding is that all of them have a 1.7% fee for the loan (kind of like an origination fee, but it's high). That's for ANY loan that is FHA. On the plus side, the interest rates are good, similar to those for a conventional loan. I'd say look into conventional loans...even in a declining market I think they'll lend to you with your 10-15% down. Just go to a regular bank that lends in that city. If that fails you can try FHA or one of the "doctor" loans.