FHA Mortgages: Putting Home Ownership In

Reach

Overview A Federal Housing Administration loan is a government-backed mortgage loan. Because the federal government stands surety for these loans, banks take less of a risk in extending them to borrowers. An FHA loan can help people who otherwise would have difficulty in obtaining a home loan in securing financing for a home purchase. The FHA program is one way the federal government encourages home ownership.

Since the financial crisis of 2008, banks have become much more risk-averse in mortgage lending. To qualify for a mortgage these days, banks typically require customers to: • Have a credit score of 620 or higher. • Bring a sizable down payment. Some banks are

insisting on down payments of at least 20 percent.

• Have a debt-to-income ratio of no greater than 43 percent.

Credit Market For Homes Tightens

Rules Make Mortgages Out Of Reach

The new, tighter rules may put a mortgage out of reach for many Americans, as the typical consumer: • Has a credit score between 680 and 730. • The average household credit card debt is

around $15720. • Many Americans have a debt-to-income ratio

higher than 43 percent.

FHA Loans Can Help Because FHA loans are backed by the federal government, lenders are more willing to make them because they are exposed to less risk. FHA loans are used by many borrowers each year. According to the most recent data available, FHA loans provide financing for: • 14.55 percent of all homes sold. • 14.02 percent of all existing homes sold. • 20.03 percent of all new homes sold.

Benefits Of An FHA Loan • Lower down payments. • More lenient rules about credit history. • Sellers are allowed to pay some or all of the

closing costs.

Even If You’ve Gone Through Foreclosure Or Bankruptcy

FHA loans may be able to help you obtain a mortgage for a new home.

FHA Requirements Some requirements to qualify for a FHA loan include: • In most cases, you’ll need to make a 3.5 percent

down payment. • The total amount you borrow should fall within

FHA loan maximums for your area. Lenders making these loans may also have specific requirements.

How A Broker Can Help Experienced mortgage brokers can help borrowers find a FHA-backed loan that meets their individual needs. Brokers can: • Find lenders offering FHA loans. • Find the best deals on FHA loans. • Help borrowers determine whether they’re

eligible and advise them on how to meet eligibility requirements if they’re not.

First Rate Financial Group, established in 1989, provides mortgage brokerage services to residents of the Westlake Village area. Our skilled professionals can help clients with first-time home purchases, new home purchases, investor loans, home refinance deals, reverse mortgages and other home finance needs. To learn more, visit http://www.frfgp.com/.

About First Rate Financial Group