The Benefit Of FHA For Ohio Home Buyers.

Andrew explains the new changes in FHA and the benefits to home buyers in this market. Below are questions and answers and if you have additional ones, feel free to contact Andrew anytime. 440.781.8737 or by emailing Andrew. Learn more about Andrew Ginter by viewing his Howard Hanna agent profile.



What is FHA? An FHA loan is a government backed insured loan for residential home purchases. The benefits are enormous and its available for all types of home buyers in Ohio. When you see HUD homes for sale, they are owned by the government, FHA.

What are the current rates with FHA loans vs conventional? A 97% Loan to Value FHA rate is 5.875% where a 97% Conventional rate is 6.125% (assuming a 680 score or better) FHA it is the same loan program whether you have a 620 score or an 800. Example of today's rates... FHA (with 620 or better): 5.5%, Conventional (620-639): 6.875%, Conventional (640-659): 6.75%, Conventional (660-679):6.25%, Conventional (680-719): 5.75%, Conventional (720 and up): 5.375%. I quote these to give you a snapshot of the spread between FHA and conventional. These rates are not static but the differences between them are.

What's the benefit of going FHA vs Conventional? FHA is easier on Credit restrictions... For instance, conventional loans are all priced off of credit score today so anything below a 660 score means that 6.125% I just quoted becomes more like 6.875%. Most lenders have minimum score requirements of 580 or 600 and even 620 with
some. Generally you don't have any rate adjustments until you go below 620 scores for FHA, and alternative credit can still be used for people with no real established credit history. FHA is also much more lenient regarding gift funds for closing and co-signers. The last biggie... FHA allows 6% seller concessions and conventional only allows 3% now across the board (even in community lending programs or OHFA).

Are there still Ameridream programs being used in Ohio and what other programs out there enable a buyer to put no money down? Right now DAPs (down payment assistance programs) no longer exist. Ameridream and Nehemia are both appealing HUD's decision to disallow them, as that appeal process goes on they will be allowed. But money still can come from approved gift sources (family, employer, non-profit organizations not funded by the seller).

What are the specific guidelines of FHA qualification? The house must be an owner occupied residence. Loan limits... single family residence: $271,050, 2-family: $347,000, 3-unit $419,425, 4-unit $521,250 All borrowers must be 2 years past a discharge date on chapter 7 Bankruptcies, and 12 months into a chapter 13 bankruptcy with documented on time payment to the trustee. Property must meet FHA requirements (needs to be fairly livable). Borrower's monthly payments on credit debts (including future house payment) must be no more than about 43% of gross monthly income. Self-employed people must show two years to income on taxes to use any of it. Collections and Judgments need to be paid off generally (except older medical collections).

What's the best reason to go FHA if you're a home buyer in Ohio? Rates are better, mortgage insurance is lower, underwriting is more lenient, loan is assumable for a future buyer, cost is generally lower.

Do you foresee any major changes with FHA in the future? DAPs could begin to come back. Nehamiah is fighting to get back in the game and it is obvious how helpful it could be in this Cleveland, Ohio market to spur home buying.

Any other information that is beneficial to an FHA borrower? Any buyer looking to spend 3% of a purchase price or less must know that FHA is by far their best option. There is no part of a conventional loan that is better than an FHA with little or no down payment involved.

Andrew Ginter can be reached anytime by phone, 440.781.8737 or by email. Howard Hanna Lakewood, Ohio.