FHA's loan requirements 2018 [Updated]

FHA's loan requirements 2018, this is going to be a fun one! For to long people have misunderstood the FHA's loan requirements and now for 2018 I will try and clear some of the fog and get the bottom of why you should or shouldn't go with an FHA's loan for next new home purchase. FHA loan requirements do chance on a somewhat regular schedule, and as new requirements surface and old ones fall off I will revisit this topic. So you are looking to buy a house and have heard about the more liberal underwriting standards FHA's affords those who bite into its sweet fruit. Here I am going to talk about the FHA's loan requirements 2018 and beyond. First off I would like to talk about the alternative options you have briefly so we can really understand the benefits and potential downsides of going FHA. . Conventional: So lets just touch on the basics, I have other videos up that go into way more detail about conventional loans so here lets just touch on a few of the pros and few of the cons of going with a conventional loan. . Your mortgage insurance will drop off all on its own without you needing to go through any type of refinance! . You can get an interest rate (assuming very good credit) in most cases very close to the FHA equivalent, that combine with the mortgage insurance that fall off by itself and you have yourself the formula for saving money! . So now that we have a basic understanding of why (or why not) someone would want to go conventional over FHA for their home loan. Let’s go over some of the parts of FHA that make it one of best, most affordable, and easy accessible loans you can get here in The United States of America. . First off lets talk about all those financial obligations that will follow you into home ownership. Lets talk about the TV you bought from Best buy for three thousand dollars and financed all of it. Let’s talk about the Italian leather couch you bought for your beautiful high rise apartment last year, which has a 250 dollar min. payment. The reason I want to talk about these things is not to lecture you on consumer debt but to let you know that it is all going to be OK! FHA has a much higher Debt to income ceiling than conventional does. This will allow you to have more debt while still qualifying for the same home as you would with a conventional home loan. Now I am not saying that is a good thing to have allot of debt saddling you before you apply for your next home loan, nor and I recommending you do so! All I am saying is if you are in a spot where it would not make sense or it is not possible to qualify for the home you want due to the debt you currently have on the conventional side of things, step over to FHA side of the field and try to get qualified again, you might be surprised! . Now the next thing I would like to go over with you is your credit and how if you have blemishes on your credit report how FHA can help you! If you have less than ideal credit (if you’re qualifying credit score is under 700) there is a way for to get a fantastic interest rate (even in the low 4s in Sept. 2018!) on your new home purchase. Like I was talking about earlier, the interest rates for FHA loans are very competitive with conventional as long as you have a 740+ fico score. The penalty you pay for less than perfect credit going the conventional route is just to much to bear these days. Even when you take into consideration the cost of the Mortgage insurance (MI) and the cost of the refinance that will need to talk place at some point to get the mortgage insurance (MI) removed, it still is a better option for more people than not more times than not! So if you have less than stellar credit than I recommend for my clients is that they go through with the purchase of their home under the safety of the FHA loan and when the time is right we do the refinance over to the conventional loan. . ** BONUS TIP Allot of people now that if they put less than 20% for the down payment you will have to pay mortgage insurance (MI). What allot of people do not know is that with their conventional loan their rate for their mortgage insurance (MI) is probably much lower than the .85 that almost all FHA loans are saddled with (assuming again a 740+ fico score). So if your rate with conventional home loan is just a tiny bit higher than FHA home loan make sure you take into your calculation the rate of mortgage insurance (MI) you would be paying on the mortgage loan. Matthew Tortorelli Loan Originator NMLS #1423422 NationsChoice Mortgage 3303 E Baseline Rd, Bldg 7 Ste 118 Gilbert, AZ 85234 480-222-8896 Direct 866-411-8424 Fax [email protected] An Equal Opportunity Lender NMLS #164626 Arizona: Mortgage Banker License BK-0019241 California: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act License 4130556