FHA Mortgage Insurance Strategies
FHA mortgage insurance is Offered to homeowners Throughout the Federal Housing Administration, a government agency that exists Inside the US Department of Housing and Urban Development. The FHA doesn’t distribute loans, rather they provide mortgage insurance to potential homeowners in the USA who are purchasing a home, condominium, townhouse or mobile home. This insurance policy makes it easier for homeowners to procure low-interest house loans with creditors with lower premiums than are generally required.
Credit Score Guidelines
Nowadays, there are no minimum credit score guidelines for homebuyers who wish to qualify for FHA mortgage insurance, though a proposition was submitted in July 2010 that would require all candidates to have a credit score of at least 500 to qualifyfor According to CNN, almost all FHA-insured homebuyers had a credit score greater than 620 in the first quarter of 2010.
Down Payment Amount
Homebuyers must procure a deposit that is at least 3.5% of the property’s purchase price. Unlike with conventional mortgages, this deposit can be received as a present, borrowed by a family member or got via a down payment assistance program.
FHA mortgage insurance may be used to buy one- to homes. The applicants must also use the home as their primary residence. Homes bought by having an FHA-insured loan must fall within the mortgage limits for the region. As of January 2010, the mortgage limit for single family houses in San Francisco was $729,750 and $934,200 to get two-family houses.
Mortgage Insurance Premiums
Two mortgage insurance premiums are expected on all FHA loansone is an upfront premium that must be paid during the house closing and the second is an yearly premium. The 2.25 percent upfront insurance premium can be paid in money or added into the home loan. The 0.55 percent yearly premium is paid in monthly installments together with the mortgage payment.
All homebuyers who wish to procure FHA mortgage must have a valid Social Security number, be a legal resident of the USA and be old enough to qualify and register for a home mortgage.