San Antonio FHA
Loans and Limits

Understanding the requirements for FHA is very important. While FHA qualifications can vary from lender to lender, these are the basic ones:

• Must have consistent employment history to be able to verify for at least 2 years. It doesn’t have to be with the same employer.
• Must have a valid Social Security Number, provide proof that you have permanent residency status, or show that you are a lawful permanent resident alien living in the United States.
• The down payment requirement for FHA is 3.5% of the purchase price. This can be given to you as a gift from a family member if needed (and documented), but the minimum investment you must have on the transaction in 3.5%.
• Can only be used for homes that you are going to be living in; investment homes and secondary residences won’t work.
• Your home must be appraised by an FHA-approved appraiser.
• Usually you must be at least 2 years out of bankruptcy and have shown the ability to re-establish yourself with your responsibilities in terms of credit. Some exceptions can be made due to extenuating circumstances beyond your control, but just keep in mind that is on a case-by-case basis and other factors will be looked at.
• If you have had a foreclosure, 3 years is the waiting period usually. Since FHA is more lenient, exceptions can be made if there were extenuating circumstances, but the FHA lender must look at your entire loan file and make a determination.

One of the most important things is to know what your debt-to-income ratio is:

• Front end ratio. This includes your mortgage payment, mortgage insurance, property taxes, and homeowner’s insurance. When you add all these up, they must be less than 31% of your gross income. This isn’t set in stone and we have seen many more borrowers get approved beyond this number, so that is why it’s best to get in touch with us.
• Back end ratio. This number is your mortgage added to the rest of your monthly debt. Take all your minimum payments for credit cards, card payments, student loans, etc, and after you add this to your mortgage, this number must be less than 43% of your gross income. Again, this isn’t the end-all-be-all and you can go higher, but it will depend on other compensating factors.

FHA Streamline Refinance

Programs such as the FHA Streamline Refinance program have helped people save money on their mortgage. For those that have been hit by falling neighborhood home values, this tends to be a very good fit and allows you an opportunity to save some money each and every month with very little risk.

• ARM

That whole process generally takes no more than 30 days. One nice advantage of refinancing is that you are allowed to skip one month of your mortgage payment after you close. Depending on when in the month your mortgage closes you can possibly not make the current mortgage payment and skip the following month as well. You can use this money to payoff another bill, fix up your home, or even go on vacation.

If you are looking to refinance and want the best rate and terms, and want an easy process with more favorable guidelines, an FHA refinance loan is probably the best choice for you.

FHA Loan FAQ

Here is a list of the most common FHA loan FAQ that we get regarding FHA home loan financing. If you have any more questions, we’re just a phone call away!

How Can FHA Help Me Buy a Home?

An FHA insured mortgage offers many benefits and protections that only come with FHA:

• Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
• Less than Perfect Credit: You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.
• Low Down Payment: FHA loans have a low 3% down payment and that money can come from a family member.
• FHA can Help You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.
• FHA fixed interest rate mortgages cost less. FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a sub-prime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments.
• You don’t have to have perfect credit to get an FHA fixed rate mortgage. Even if you have had credit problems, such as a bankruptcy, you may still qualify for an FHA mortgage. Should you encounter hard times after refinancing your home, FHA has programs to help you keep you in your home and avoid foreclosure.

How Can I Improve my Credit Score?

There are many ways to go about improving your credit score.

First you want to obtain a copy of your credit report. Often there are old on incorrect items on a credit report. Secondly you will want to look at balances on different accounts. The credit bureaus like to see the amount owed on a debt at 60% of the max limit or less. Keep in mind by law debts have to fall off 7 years after they are placed on the credit report. You also want to limit the amount of times that your credit is pulled by creditors. Luckily, mortgage companies and automobile dealership inquiries are treated a little differently, so they do not impact your credit as much as some others like credit card inquiries. The other option to improve your credit is to remove the negative and incorrect items from your report. This is most successful when working with a credit repair company. These programs generally take between 45-90 days, and can have a significant impact on your credit score.

Are FHA Rates Higher than Conventional Rates?

No, in fact, they are often lower than similar conventional loans. Because the Federal government insures your loan, lenders are able to offer very competitive rates. FHA also doesn’t increase your rate based on your down payment, so you get the same rate whether you put 3% down, or 20% down. This is not the case with conventional financing.

Does FHA allow for seller paid closing costs?

FHA will allow the seller to pay up to 6% of the purchase price toward the buyer’s closing costs. This is called a seller’s concession. Most conventional loans only allow a 3% concession.

The Next Step

Hopefully, you learned everything there is to know about FHA loans.

I’m always here to help, so if after reading this entire FHA loan guide you still have more questions or would like to get a quote, just get started today!