How Much Cash Do I Need To Buy My Home?
Section 203(b), also known as FHA loans are the centerpiece of FHA’s single-family mortgage insurance programs, the successor of the program that helped save homeowners from default in the 1930s, helping to open the suburbs for returning veterans in the 1940s and 1950s. That helped shape the modern mortgage finance system.
Today, FHA One- to Four-Family Mortgage Insurance is still an important tool through which the Federal Government expands homeownership opportunities for first-time homebuyers and other borrowers who would not otherwise qualify for conventional mortgages on affordable terms, as well as for those who live in underserved areas where mortgages may be harder to get. These obligations are protected by FHA’s Mutual Mortgage Insurance Fund, which is sustained entirely by borrower premiums.
This program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified buyers. Insured mortgages may be used to finance the purchase of new or existing one- to four-family housing, as well as to refinance debt.
- Down payment requirements can be low. In contrast to conventional mortgage products, which frequently require down payments of 5 percent or more of the purchase price of the home, single-family mortgages insured by FHA under Section 203(b) make it possible to reduce down payments to as little as 3.5 percent. This is because FHA insurance allows borrowers to finance approximately 96.5 percent of the value of their home purchase through their mortgage, in some cases.
- Some fees are limited. FHA rules impose limits on some of the fees that lenders may charge in making a mortgage. For example, the mortgage origination fee charged by the lender for the administrative cost of processing the mortgage may not exceed one percent of the amount of the mortgage.
- HUD sets limits on the amount that may be insured. The current FHA mortgage limit for one-unit dwellings ranges from $271,050 to $729,750 depending on geographic location.
Anyone intending to use the mortgaged property as their primary residence is eligible to apply and be considered for an FHA insured mortgage through FHA-approved lenders.
Any person can apply for an FHA insured mortgage, but it is limited to owner-occupants.
Please view our Disclosures page for details.
Call Theresa Springer (MLO #70667/NMLS #70667) today at 360-798-4161 to see the difference that working with an experienced home loan professional can make for you.
Word on the Street...
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