FHA Down Payment Assistance
FHA mortgage loans provide many options to the homebuyer. FHA offers down payment assistance programs that make this loan very desirable to buyers with little cash. Even with out the gift or grant programs a buyer can usually get an FHA loan with as little as a 3% contribution. This means moneys applied to closing costs or down payment. It is a little more confusing than conventional loans but the interest rate is as good or better so it is definitely worth the effort.
Gifts for both the down payment and the closing expenses may come from acceptable sources such as: family member, close friend, borrower’s employer or labor union, a charitable institution, or a governmental agency or public entity that has a FHA-accepted homeownership assistance program.
All of the money for the down payment and closing costs may come from a gift or grant program. The funds must be documented to show that no repayment is required and the donor will not put a lien on the property. The gift may not be used to meet the borrower’s 3 months PITI (principle, interest, taxes, and insurance) reserves that are needed if they are purchasing a for 3 and 4 unit property.
A Gifts cannot be used to falsly increase a borrower’s assets (bank balance or savings) in order to show enough reserves remaining after closing that would change the automated results from a Refer or Ineligible to an Approve Eligible or Accept status. The underwriter has to look at the results to determine if any gift amount is actually being considered as part of the reserves. If this is the case, the gift amount must be subtracted from the reserves shown on the findings and the loan must be run through the system again to provide an accurate depiction of the assets and then proceed to obtain a clear approval.
A gift letter must specifically state there is no repayment and clarify that the gift donor is not tied to the loan transaction in any way.
The transfer of funds from the gift donor to the borrower is required. A lender must document the transfer of funds from the donor’s account to the borrower’s bank account by obtaining a copy of the canceled check or other satisfactory withdrawal document that shows the gift is leaving the donor’s account and is being deposited into the borrower’s account. If the gift amount is being received at the closing, a certified check from the donor and a copy of the withdrawal receipt from the donor’s bank account is required. The closing agent must make copies of these documents to forward to the lender with the closing package.
If the donor borrowed funds for the gift, the donor must provide acceptable documentation that the funds were not borrowed from a party to the transaction or the mortgage lender. Cash-on-hand from the donor is not acceptable.
Other benefits with an FHA mortgage include: low interest rates, forgiving about minor past credit problems (even while in a chapter 13), and a no qualifying stream line refinance. As you can see everyone should consider an FHA loan.
FHA mortgages are excellent tools which can be used to help many first time home buyers with no credit or past credit problems enter into the housing market. The \"subprime\" mortgage crisis going on now has resulted in a buyer\'s...
Fha Refinance ProgramsMany people do not realize that FHA mortgage rates are equal to and sometimes even lower than a Conventional mortgage. Homeowners who would like to consider lowering their payments or getting out of an adjustable rate mortgage should seriously consider...
fha refundsRemember the first mortgage you signed for, sitting at the table and looking at all the fees you were charged by so many different people, just to get your mortgage. It seems overwhelming. Have you ever noticed that they are...
FHA Mortgages Help Home Buyer’s With Past Credit ProblemsIf you have been contemplating buying a home, but you have experienced credit problems, recent changes in the guidelines for FHA loans may provide the answer to your problems. FHA is not actually a new program, but the guidelines have...
GA Mortgages: FHA Refinancing During The Mortgage CrisisYou cannot turn on the news without seeing a new headline trumpeting the meltdown of the mortgage industry. Obtaining a conventional mortgage is becoming more difficult by the minute. Qualification guidelines are arguably tighter than they have ever been....