FHA loan program was created to help increase homeownership. Buying a home easier with FHA and less expensive than other types of real estate mortgage home loan programs.
FHA Buydown
Lenders will allow you (the borrowers) to temporarily "buy down" the interest rate on a mortgage. The FHA 2-1 buy down allows a purchaser to reduce the initial interest rate on their mortgage by 2% the first year, 1% the next year, and 0% every year thereafter.
The lender must establish that the eventual increase in mortgage payments will not affect the borrower adversely and likely lead to default. The underwriter must document that the borrower meets one of the following criteria:
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The borrower has a potential for increased income that would offset the scheduled payment increases, as indicated by job training or education in the borrower's profession or by a history of advancement in the borrower's career with attendant increases in earnings.
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The borrower has a demonstrated ability to manage financial obligations in such a way that a greater portion of income may be devoted to housing expenses. This criterion also may include borrowers whose long-term debt, if any, will not extend beyond the term of the buydown agreement.
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The borrower has substantial assets available to cushion the effect of the increased payments.
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The cash investment made by the borrower substantially exceeds the minimum required
Debt
Debt is a word your FHA loan officer uses to describe any situation that you borrow money. "Too much debt" is how the industry describes situations where people borrow more money than they can easily repay. There are a lot of types of debt: credit card debt, department store debt, charge accounts, auto loans, student loans, mortgages, and money that you may owe the Internal Revenue Service. You might also borrow from parents, relatives, and friends, although those debts may not be reflected in your credit report.
Your ability to borrow more money or to have your credit extended is directly reflected by how much debt you carry. Mortgage lenders, for example, determine your purchasing ability by applying a debt-to-income ratio (a ratio that is calculated by totalling your monthly debt payments plus the proposed monthly debt payment divided by your gross monthly income). Too high of a debt-to-income ratio reflects greater risk with the loan and may result in rejection of the credit application. Most mortgage lenders will allow you to pay up to 42 percent of your gross monthly income in debt service. Of course this may vary depending upon the loan size, the type of loan, and the type of property you are purchasing.
FHA Credit Issues
General FHA guidelines regarding a person credit history
FHA guidelines Full Article.
First Time Homebuyer
Owning a home can be a significant first step in attaining financial independence. We can help you eliminate rent payments, build equity, and feel the personal satisfaction of calling a home your own. With our Mortgage Guarantee, you can have a pre-approved mortgage amount before you decide on the home you want. Your pre-approved mortgage provides you the buying power of a cash buyer.
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