Qualifying For FHA Loans
A special program for qualifying home buyers that offers 3.5% down payments and competitive interest rates. … read more
Refinance Your FHA Loan
Current FHA borrowers can take advantage of the streamlined refinance program with less hassle and paperwork. … read more
Learn how to shop for the best FHA mortgage interest rate to get the lowest payment for purchase or refi. … read more
- About FHA Home Loans
- Benefits of FHA Loans
- Who is Eligible?
- Buying with an FHA Loan
- Refinancing-FHA Streamline
- FHA Loan Limits
- FHA Buy Again After
Tallahassee FHA Loans in Florida
You are in the right place to learn more about buying or refinancing your Tallahassee home loan with an FHA loan.
Over 34 Million Homes insured through the FHA mortgage program since 1934 when the program was created.
Compared to conventional mortgages that have tighter underwriting guidelines, FHA-insured loans appeal to a wider range of home buyers by offering easier credit standards, lower down payment requirements and more flexible income calculations.
Tallahassee FHA Home Loan Benefits
The purpose of these loans is that the US Federal Housing Administration can help homebuyers by providing mortgage insurance on your loan. The FHA itself does not actually make the loans, instead they "insure" the mortgages that a traditional lender or bank would make to a borrower.
Primary Benefits Of FHA-Insured Mortgage Loans:
- No prepayment penalties on your loan
- Can streamline refinance for a lower rate
- Flexible Credit Requirements
- Competitive rates and lower fees
- Higher approval rates
- Low Down Payment
Basically, the FHA helps more Florida borrowers afford to buy homes by giving lenders the assurance they need in the case where a borrower defaults on a loan and is unable to continue making mortgage payments.
FHA Loan Eligibility in Florida
The FHA has several different types of "insurance" programs that range from a typical purchase or refinance that most people are familiar with, knowns as a 203(b), to Renovation Loans and Reverse Mortgage / Senior Lending loans.
*This website is dedicated to the traditional 203(k) FHA-insured loan program.
Tallahassee Occupancy Requirements For FHA Loans
Many people have questions about occupancy requirements when applying for an FHA mortgage loan. Simply put, borrowers need to intend to occupy the subject property as their primary residence.
This means that the owner must be residing in the home the majority of calendar year. Following closing of the loan, FHA loans require the borrower to be residing in the home within 60 days of closing.
FHA loans are not available for non-owner occupied residencies such as secondary homes and investment properties. There are very rare cases that you will be able to take out an FHA loan on a secondary property, but you should expect additional hurdles. Rental properties are not allowed for an FHA loan as the owner must occupy the residence in which the loan is taken out on. The only exception to this rule is if is a multi-unit property and the owner occupies one of the units.
Tallahassee Property Types For FHA Loans
The following property types are eligible for an FHA loan:
- Single family homes
- Multi-unit properties (up to four units)
- Manufactured homes
To be clear about what each property type is, you should read the following to make sure your property is eligible for an FHA mortgage loan.
A single family home is a stand-alone property or one that shares one common wall with another building. If it is attached to another building, there must not be any access from the building to your home. Investment properties, however, are not eligible to be FHA insured.
A townhome is a home that is attached to other units in a row. Each unit shares a common wall with the surrounding units along with the same roof. Each of these units is built to house an entire family and meets FHA loans eligibility.
Multi-unit properties are allowed and meet FHA mortgage eligibility requirements. Multi-unit properties with up to four units are FHA insurable as long as the owner occupies one of the units. If the owner does not occupy any of the units, the property does not meet FHA eligibility requirements.
Condominiums are one unit of a multi-unit complex. The owner only owns the inner walls within the home but do not own any portion of the outside property or building. Usually, the owner is required to pay condominium associate fees that help pay common areas on the property such as pools, gyms, and clubhouses. It is important to understand that if the FHA loan is on a condominium that the entire condominium community must meet FHA eligibility requirements.
Manufactured homes are homes that have been built in a factory and then shipped to the building site. It is then placed on a permanent foundation and can then be recognized as an immobile property and can be FHA insured. Some additional requirements for manufactured homes include a minimum square footage of 400, meet strict safety guidelines, and constructed after June 15, 1976. The foundation and elevation of the land underneath must also meet FHA eligibility requirements. Lastly, the borrower must own the land underneath the home in order to be FHA insured.
Unlike conventional loans, a borrower applying for an FHA loan does not need to have high credit scores with a perfect credit history. While most conventional lenders prefer credit scores in the 700's for premium rates and pricing, FHA lenders can fund loans for borrowers with credit scores in the mid to lower 600 range. Some banks may even make exceptions for FICO scores lower than 600 for elibible Tallahassee FHA loans.
As a good rule-of-thumb, lenders like to see a clean credit history for at least one year.
It's important to remember that each bank may have their own credit score and history requirements when considering a borrower for an FHA loan, which is why it is important to search for a FHA lender that specializes in government insured mortgage programs.
FHA loan requirements will also make exceptions for those who don't have any credit history. Usually in the case of no credit history, recent utility bills and proof of payment may be acceptable.
Foreclosures and bankruptcies also won't disqualify you from an FHA loan. The rules for being eligible for a new FHA loan after a certain amount of time has passed from a bankruptcy or foreclosure have changed in recent years, but the time frame is considerably less than if you were attempting to qualify for a conventional mortgage loan. Either way, if the borrower has had a foreclosure or bankruptcy, they must display good credit maintenance since the date of foreclosure or bankruptcy.
FHA mortgage lenders want to see at least two years of continuing employment with steady or increasing income and very few gaps of unemployment.
Eligibility requirements for FHA loans are more lenient allowing up to 30% ratio of monthly gross income to monthly mortgage payment. Most conventional mortgage loan lenders will not allow you to exceed a 28% ratio. For example, on a monthly income of $4,500, FHA loan lenders will allow your monthly payment to be up to $1,350 whereas a conventional mortgage lender will only allow a payment as high as $1,260.
FHA down payment requirements only ask for a 3.5% down payment. This is far less than the conventional mortgage lender requirement of 5% or more. The 3.5% down payment is calculated using the property's sale price.
This means for a home that is sold for $200,000, your down payment for an FHA mortgage will only be $7,000.
If you meet all of the FHA mortgage eligibility requirements and are ready to begin the application process, use this list to get all of the required documents ready to go.
- Social Security card
- Residence History (Two Years)
- Proof of Income (Three Month's Pay Stubs)
- Assets (Three Bank Statements)
- Tax Returns (Two Years)
You'll also want to be prepared to write a letter of explanation or provide documentation for any discrepancies that may be found on your credit report. Additionally, paperwork for all other real estate owned, assets or other liabilities.
Don't worry, your FHA lender will walk you through the documentation and approval process. Feel free to give us a call directly at 866-699-2365 if you have any initial questions.
BR Home Loans
Buying a Home With an FHA Loan
While there are many advantages to buying a home with an FHA loan, the low down payment requirement is one of the primary reasons homebuyers use FHA loans to purchase real estate.
Loan-to-Value (LTV) Limitations
FHA purchase guidelines allow a Loan-to-Value (LTV) percentage of up to 96.5% on all qualified property types. Qualifying property types include single family homes, townhomes, condominiums, multi-unit properties (up to four units), and manufactured homes. Most conventional mortgages will only allow a Loan-to-Value (LTV) percentage of up to 90% for condominiums and only 95% LTV ratio for single family homes.
The amount that you can finance through an FHA mortgage loan is determined by your geographical location. Each state and county has its own limitations and can vary one county to the next. It is important that you speak with your consultant to determine what the maximum amount you are allowed to borrow with an FHA mortgage loan.
Mortgage Insurance Premium
FHA purchase guidelines require borrowers to pay for mortgage insurance premiums. This insurance premium pays for the insurance that FHA loans uses in the event that the borrower defaults on their loan. Because FHA loans promise to pay the lending bank if the borrower defaults on the mortgage, they must charge this insurance.
Mortgage insurance premiums are charged in two ways. FHA purchases require an upfront payment of the insurance premium and a monthly fee along with your mortgage payment. The upfront mortgage insurance premium is 1.75% of the loan value. If your loan amount is $580,000, you will be required to make an upfront payment of $10,150. You will also be charged a monthly insurance premium fee based on your Loan-to-Value (LTV) (LTV) percentage and the length of your loan. This fee is calculated annually as the loan balance depreciates over time.
For FHA loan terms longer than 15 years, you will be charged the following insurance premium fee (calculated annually, charged monthly):
- If your LTV > 95%, you will be charged a 1.250% annual fee
- If your LTV <= 95%, you will be charged a 1.200% annual fee
For FHA loan terms 15 years or less, you will be charged the following insurance premium fee (calculated annually, charged monthly):
- If your LTV > 90%, you will be charged a 0.600% annual fee
- If your LTV <= 90%, you will be charged a 0.350% annual fee
- If your LTV <= 78%, you will not have to pay an annual mortgage insurance premium fee
FHA purchase guidelines also require an additional 0.250% mortgage insurance premium annual fee for loans exceeding $625,500.
FHA Streamlined Refinance
Your Tallahassee refinanced FHA mortgage has the option of being streamlined as long as it meets some requirements. FHA loan eligibility requirements for the streamline refinance are as follows:
- Mortgage needs to already be FHA insured
- Pre-existing mortgage must be up to date and current
- Refinance must lower monthly principal and interest payments or be converting from an adjustable rate mortgage (ARM) to a fixed-rate mortgage
- Cash-back is not an option for a streamline refinance
The streamline refinance FHA mortgage can help save time and resources by not requiring as much paperwork as other refinance programs. One way this is possible is by offering a non-credit qualifying streamline loan. A non-credit qualifying streamline mortgage will cancel out the need for new credit checks and job verification and use your current mortgage as a way of qualifying you. Assuming that the borrower meets all of the qualifications for an FHA refinanced mortgage along with the refinance lower monthly principal and interest rates, the borrower could be eligible for a non-credit qualifying FHA streamline loan. The only other FHA eligibility requirements for a non-credit streamline mortgage include:
- Having at least six months pass since the first due date of the existing mortgage
- A minimum of 210 days must have passed since the closing date of the existing mortgage
A borrower may not qualify for a non-credit qualifying FHA streamline loan if the monthly principal and interest rates increase as a result of the refinance. The borrower will still be eligible for a streamline loan but will still need to submit to a credit check.
FHA Loan Limits
FHA loan amounts that are over $417,000 are referred to as "FHA jumbo loans". They carry similar terms and interest rates as the lower FHA mortgage amounts. The Economic Stimulus Act of 2008 permits FHA to insure loans amounts up to 125% of the areas median home prices when that amount is between the national minimum of $271,050 and maximum of $729,750. These limits were increased to provide economic stability to America's communities. The $729,750 is only available to extremely high cost metropolitan areas. Previously the maximum loan was capped at $362,790.
FHA Jumbo mortgages allow a homebuyer to purchase a home and finance up to 96.5% of the purchase price. One of the reasons that these loans are so popular are that most conventional loans do not allow for such high Loan-to-Value (LTV) ratio and Federal Housing Administration loans can meet the needs of a larger range of buyers and credit profiles. While these loans are available they are a great alternative for people looking for Jumbo financing. The rates are low and you may be able to put as little as 3.5% down.
The FHA jumbo loan limits are as follows:
- 1-unit, from $417,000 up to $729,750
- 2-units, from $533,850 up to $934,200
- 3-units, from $645,300 up to $1,129,250
- 4-units, from $801,950 up to $1,403,400
To qualify for the maximum loan amounts listed above the property must be located in a high cost area as determined by the FHA. To see if the property is located in one of these areas you can use the link below:
FHA Back to Work
Tallahassee, FL Boomerang Buyers are able to finance again after an announcement made in August 2013 in regards to Extenuating Circumstances.
For example, Tallahassee residents who have in the past lost their homes resulting from loss of income or employment may now have the option to buy again as soon as 12 months after filing for bankruptcy, short sale, or foreclosure.
As opposed to other extenuating circumstances, the Back to Work program is actually very rare on the extenuating circumstance exceptions. However, the definition in qualifying is very specific and clear.
Tallahassee, FL FHA’s Back to Work program for many is a second chance for to buy again after having to undergo such financial hardship listed within the guidelines making them eligible for this program.
Qualifying for Florida FHA’s Back to Work Program
There are eligible economic events listed in the extenuating circumstance exception guidelines, such as:
-Loss of Income
-Loss of Employment
There are two ways you must document the reason for loss of income. One of these two ways are usually acceptable:
1.) Written Verification of Employment (VOE) with documentations of the date and the amount showing that the income has in fact dropped.
2.) Tax returns signed or W-2’s showing proof of loss income in the household.
The Extenuating Circumstances is if the loss resulted in at least a 20% drop in income or reduced income for 6 months.
For applicants with exceptional circumstances such as loss of employment must provide:
- Written Verification of Employment (VOE) confirming the date of termination.
- If loss of employment was actually due to the employer running out of business then there are a few extra requirements such as:
- Written notice of termination.
- Available public documentation of the business closing.
- Documentation of unemployment income.
With the Tallahassee, FL Back to Work Program in effect now, many former homeowners are able to buy again as long as they can show evidence of on-time payments for the past 12 months proving that you have recovered from your losses. If you are able to show proof of recovery in a loss of income of 12 months after filing bankruptcy, short sale or defaulting into foreclosure then the Back to work program may be something you can definitely look into if you are considering to buy again.
Back to Work Terms and Definitions
Below are a few terms currently being used in the eligibility process of the new FHA Back to Work Program.
- Economic Event: An event that takes place and is beyond your control of the outcome resulting in loss of income or employment, and sometimes even both in which causes for a reduced income of 20% or sometimes more within the household and for a lengthy period of at least 6 months.
-Onset of an Economic Event: The Onset of an Economic Event is the month that the event took place.
-Recovery from an Economic Event: This event is when a person has restored their credit and now meets Satisfactory Credit for a minimum of 12 months. Satisfactory Credit means that a borrower’s credit history is free of late payments pertaining to housing or any installment debts, major derogatory credit issues in revolving accounts. If you have a current mortgage, it must also show a satisfactory payment history for at least 12 months.
-Borrower Household Income: The total gross income of the borrower and all members of the household must be calculated for assessing a loss of income.
-Household Member: An individual is considered a household member if they were living in the home at the time the event occurred and was also a co-borrower of the defaulted mortgage.
-Housing Counseling: Counseling from a housing counseling agency approved by HUD and should be related to homeownership and residential mortgage loans.
-Borrower: Borrowers and Co-borrower.
Keep in mind that there are a lot of documentation required for the process of this new FHA program. Feel free to give us a call at 866-699-2365 and ask a lender today on how you can get started on the new FHA Back to Work Program!