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Closing on their home -  financed with an FHA mortgage

Federal Housing Administration (FHA) Home Mortgage and Refinance Programs.

The Federal Housing Administration (FHA) is constantly adjusting its guidelines for first time home buyers and for FHA streamline refinance borrowers so as to maintain the integrity of the mortgage insurance pool.

Since FHA loans are some of the most popular government loans, the FHA does allow for non-occupying co-borrowers including parents, grandparents, aunts, uncles, brothers, sisters or any other direct family member who can strengthen the file. Co-borrowers can bring more income and/or a stronger credit profile to the file to help the borrower qualify for an FHA home loan.

The FHA loan is also a great alternative for first time home buyers who are looking to finance or owners who are looking to refinance a multi-family property. FHA guidelines state that all homes purchased using government mortgage insurance must be primary residences, and FHA continues to be the best option for the purchase of two family or three family properties. FHA guidelines allow up to 85% of the gross rental income to be used for mortgage qualification.

In 2013 the FHA made some changes to their first time home buyers and refinance programs. Please don’t hesitate to reach out to a Poli Mortgage loan professional to discuss pre-approval and qualification details for the latest FHA home financing options.

To be pre-approved for an FHA first time home buyer’s loan or an FHA traditional refinance loan, you will need the following documentation:

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  • Primary borrower’s and co-borrower’s current income as well as a full two year employment and income history
  • Asset account statements including checking, savings and retirement accounts
  • Location of property to be purchased or refinanced
  • Property type - single family or multi-family
  • Primary borrower’s and co-borrower’s social security numbers and dates of birth for credit report

The documentation required for an FHA streamline refinance loan includes:

  • Original mortgage note
  • Payoff statement from current lender
  • FHA case number pulled by Poli
  • 6 full payment cycles since first payment due date
  • 210 Days since original closing date
  • 2 months bank statements (if funds are needed for closing)

2013 Changes - FHA First Time Home Buyer Program.

Changes from previous years are minimal and FHA continues to be your best mortgage loan option for purchasing a home with less than a 5% down payment:

  • FHA down payment requirements for 2013 are unchanged and remain at 3.5% of the purchase price
  • Annual FHA premiums for all purchase transactions with a loan to value of 95% or higher (i.e. less than 5% down payment) will be increased to 1.25% annually
  • The up-front mortgage insurance payment (UFMIP) will be 1.75% of the loan amount, but it can be financed in addition to the 96.5% loan amount

2013 Changes - FHA Traditional Refinance Program.

The traditional refinance into an FHA insured mortgage is largely unchanged for 2013. This type of refinance is also commonly referred to as a “Credit Qualifying Refinance”.

A borrower can utilize a credit qualifying refinance to get into a FHA mortgage from a conventional mortgage or choose to move from one FHA loan to a new FHA loan.

The Annual Premium will be 1.25% of the loan amount for all loans traditionally underwritten and originated after May 31, 2009.

2013 Changes - FHA Streamline Refinance Program.

In 2013 there was very good news for the Streamline Refinance of loans originated prior to May 31, 2009.

If your mortgage had been “endorsed” or insured by FHA prior to May 31, 2009, you will receive a break on your annual mortgage insurance premium. The new annual premium will be reduced to .55% of the loan amount which should produce a significant savings in mortgage insurance payments.

Additionally, the new UFMIP for all streamline refinances will be .01% instead of the previous 1.00%.

2013 Changes - FHA Loan Sizes.

Overall FHA loan limits remain unchanged for 2013. Loan limits are set on a county-by-county basis.

As part of your first home buying process, be sure to check with a Poli Mortgage loan professional to ensure your anticipated home purchase will qualify for FHA financing.

FHA mortgage requirements are based on the borrowers' ability to repay the mortgage and not on the borrower(s) having a perfect credit history. FHA loans are available from HUD to borrowers who can afford their mortgage payments but who don’t have pristine credit scores, a very large portion of the population.

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