Federal Housing Administration Loans

Federal Housing Administration (FHA) Loan requirements and guidelines cover things like mortgage insurance, lending limits, debt to income ratios, credit issues, and closing costs.

“The FHA refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly.” –FHA.com

Obviously the most common reason for a refinance is to reduce your mortgage payment.

It’s important to talk to experts like Branch Manager and Loan Officer Michael Shotnik about your options and qualifications to best meet your needs.

“FHA Streamline is a very easy refinance. With no income documents and no appraisal, your rate can be improved to reduce the mortgage payment. Depending on qualifications, the refinance can be offered at no cost.” – Michael Shotnik

There are several different FHA loans. The best course of action is to discuss your financial situation with a professional and get started saving money on your mortgage.

FHA for Home Buyers

FHA loans are a good way for borrowers who qualify to get lower down payments and more flexible qualification requirements. Contact us today to talk with a loan officer to see if an FHA loan is right for you. 303-800-4595.

 

Derogatory credit events happen and sometimes out of our control. Below is a list of the FHA waiting periods that are required after one of these events takes place:

BANKRUPTCY CHAPTER 13:
If Chapter 13 was completed successfully then there should be no waiting. If the circumstance arises that you are still in chapter 13 then you have to get permission from the court to move forward first. This is assuming the purpose is to buy a home and you have been paying on the chapter 13 successfully for 12 months or more.

Bankruptcy Chapter 7:
A minimum of 2 years waiting period from the date of the discharge. An explanation is required.

Short Sale:
In order for a determination, a 3 year period must be made prior from the date of sale. An explanation is mandatory. There is an exception to the rule here, if you did a short sale and did not have any mortgage payments that were late prior to or during the short sale then you can be considered applicable. Another factor that will be assessed here, are your other credit accounts paid on time? Contact us today if you think you qualify for some of these exceptions.

Foreclosure:
You must have a public’s trustee’s certificate of purchase alongside the 3 year waiting period. There is an exception to this period of time if you can qualify under the FHA Back to Work program. Call Sierra Pacific Mortgage today to see if you qualify in Denver Colorado.

The most flexible loans for a credit score are FHA loans, these are insured by the Federal Housing Administration. FHA loans are some of the most flexible loans from a credit score, down payment and credit history perspective. Many times the FHA loan will be paired with down payment assistance programs. Some of the attributes of this loan include but are not limited to:

Upfront Mortgage INS:
1.75% of the base loan amount (can be financed)

Maximum Loan Amount:
Various by county

Monthly Mortgage INS:
.45% annually…for 10% or greater down payment on a 15 year Fixed Loans
.70% annually…for less than 10% down payment 15 year Fixed Loans
1.25% annually…for 5% or greater down payment on 30 year Fixed Loans
1.35% annually…for less than 5% down payment on 30 year Fixed Loans
* – These options have MI for the life of the loan

 

FHA Loan Down Payments

A down payment is a percentage amount of the full purchase of a home, and is the initial amount you put up against the full amount of that home. The amount that your able to put down co-insides to your credit score. Your credit score is the number range between 300 to 850 that’s used as a metric to determine your creditworthiness.

The FHA loan requires a minimum 3.5% down payment for a credit score of 580 or higher. The larger amount or percentage that you are able to put down the more eligible you are with a lower credit score say in the range of 500 – 579. Call Sierra Pacific Mortgage of Denver Colorado today to find out what our minimum credit score is for the FHA loans. You may be pleasantly surprised.

Using a resource like a mortgage calculator can help ypu not only plan but estimate monthly payments. Find one that allows you to see how your down payment affects your monthly amount.

You may receive down payments in the for of gift assistance for the FHA loan, make sure these are well documented to validate that that it is actually a gift not masked as a loan.

 

FHA Loans and Credit Score

Your credit score is a combination of elements all wrapped up into one which include:
– Do you pay your bills on time
– The amount you owe on your credit cards
– How much recent and new credit you have used.
– The kind of credit you have whether that is (loans, credit cards, etc.)
– Credit Utilization, this is the amount of credit that you use.
The better your credit score is the more likely you are to be eligible for a higher debt-to-income ratio, or DTI. To better understand what DTI is, take your total monthly debt payments divided by your monthly gross income (your monthly gross income before taxes). This amount will be shown as a percentage.

The lower your DTI, the more advantage you will have. If you have a DTI that is higher, you can still qualify for an FHA loan to dont let this discourage you.

The FHA says that your monthly mortgage payments should be nor more than 31% of your monthly gross income. Your DTI should not exceed 43% of monthly gross income in situations where your loan is being manually underwritten.

As mentioned before, if your credit score is high than you may be eligible to qualify with a higher DTI.

 

FHA Interest Rates

Compared to conventional loan mortgages, FHA interest rates can be competitive. The risk you pose is lessened because the government backed loan allows you to offer a lower interest rate in return.

The rate is justified by many different factors, including the prevailing interest rates, your income, the total amount you want to borrow, credit score, down payment, debt-to-income (DTI) and more.

 

FHA Income Requirements

There isn’t a set amount that determines whether or not you’re eligible for the FHA loan. You just have to prove that you have steady employment history. You can verify your income with documents such as W-2s, pay stubs, bank statements and federal tax returns. Your lender will ask you for these documents so its always good to prepare them ahead of time. There is a possibility that you will be asked for other forms of verification as well.


Have more questions?
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Sierra Pacific Mortgage NMLS# 1788. Michael Shotnik NMLS: 218281, CO License: 100017466. Not licensed in Alaska or New York.  To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.