Orange County FHA, VA & First Time Buyer Loan Information

How Does FHA Compare to Conventional in 2015

FHA versus ConventionalThe FHA loan program had been the loan of choice in Orange County, CA after the mortgage collapse in 2008. With Conventional and non-Conventional loan programs that allowed for small (or $0) down payments quickly disappearing, FHA stepped up. Not only did FHA increase the loan limit in Orange County to as high as $729,750 at one point, but also left the annual mortgage insurance premiums very low at .5%. But then, in 2010, FHA began to increase the annual mortgage insurance premiums. First to .55% in April 2010, then .9% in October 2010, then 1.15% in April 2011, 1.25% in June 2011, and finally to 1.35% in April 2013. At the same time Conventional loan programs (Fannie Mae and Freddie Mac) began to come back into the market with viable low down payment programs. But in 2015 FHA has made a move that once again makes it a very competitive loan program.

FHA Lowers Annual Mortgage Insurance Premiums in 2015

President Obama made the initial announcement on January 7, 2015. and FHA sent the official Mortgagee Letter out soon after announcing that effective with new FHA case numbers pulled on or after January 26, 2015, the Annual Mortgage Insurance Premium would drop by .5%, down to .85%. This is a huge drop. A $400,000 FHA loan would have a lower monthly mortgage insurance payment by approximately $166. On a $400,000 FHA loan at 1.35% MIP the old mortgage insurance payment would have been approximately $450 per month. At .85% MIP the mortgage insurance payment drops to approximately $283.

FHA May Be The Best Choice

There was a great article in the LA Times titled "An FHA loan may be a good choice".  which does a good job of spelling out the advantages an FHA loan may have over Conventional financing. For example, FHA is more flexible than Conventional underwriting when it comes to debt to income ratios. Someone who is trying  to push the debt to income ratios above 45% will most likely need to go with an FHA loan. (and for a Veteran, nothing beats the VA loan program.) Also, for someone whose FICO score is under 720 or had a bankruptcy less than 4 years ago and more than two years ago, FHA may be the best choice. FHA also has a shorter waiting period after a foreclosure or short sale than standard Conventional requirements. The lower the FICO score the more it makes sense to choose FHA. 

There are also times when Conventional may be the best option, even if the payment is higher than FHA. For someone looking to buy a condo in Orange County, it will be easier to get financing using a Conventional program than FHA. For a condo to be financed with an FHA loan, the condo project must be on the FHA approved list. The FHA condo approval list is fairly slim. For example, as of this writing there are only 10 FHA approved projects in the city of Mission Viejo. Costa Mesa also has 10. Aliso Viejo lists 20 approved projects.  While it is possible to limit an FHA borrowers search to only those condo projects that are FHA approved, the search can be opened up quite a bit if Conventional financing options are available.

How to Does an Orange County Home Buyer Know Which Program is Best?

With mortgage programs constantly changing, it is important for potential home buyers to talk to an Orange County Home Loan Specialist who can quickly gather enough information from the initial contact to put together custom loan scenarios, along with a Side by Side Total Cost Analysis comparing several loan programs. A Side by Side Analysis will help the buyer determine which program (FHA, Conventional, VA, etc) fits best in with their short and long term financial goals. Financing a home will be the biggest financial decision most people will ever make. Making sure you are making an educated decision is extremely important.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. www.OrangeCountyFHAExpert.com. I will prepare custom FHA and Conventional loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Find Tim Storm on Google+

 

Subscribe to my blog Via Email:  Enter your email address:

Delivered by FeedBurner

Comment balloon 0 commentsTim Storm • January 20 2015 09:00AM
How Does FHA Compare to Conventional in 2015
share
The FHA loan program had been the loan of choice in Orange County, CA after the mortgage collapse in 2008. With Conventional and non-Conventional loan programs that allowed for small (or $0) down payments quickly disappearing, FHA stepped up. Not… more
Lower Mortgage Insurance with FHA Streamline Refinance
share
The FHA Streamline refinance will be how most current FHA borrowers in Orange County take advantage of President Obama's recent announcement about lowering the Mortgage Insurance premiums on FHA loans in 2015. Right now is almost a perfect storm… more
. 85% FHA Mortgage Insurance to Help Orange County Affordability
share
President Barack Obama announced on January 7, 2015 that the Federal Housing Administration (FHA) would lower its annual mortgage insurance premiums from 1. 35% to 85% (for loan to values above 95%). Although a date has not yet been announced for… more
2015 VA Loan Limit for Orange County, CA
share
The VA loan limits for 2015 in Orange County CA will be $625, 500 which is a little lower than last year but still a high limit considering there is no down payment required. The $0 down VA loan limit in 2014 for Orange County was $687, 500, and… more
Four Financial Keys to Buying a Home in Orange County, CA
share
Buying a home is the biggest financial decision in most people lives. In Orange County, where home prices tend to be higher than other parts of the country, the decision to buy a home priced anywhere from $300, 000 to $1, 000, 000 or more can cause a… more
FHA Loans on Detached Condo's
share
While there are not many FHA approved condo projects in Orange County, CA, it is possible to get an FHA loan on a detached condo even if the condo project is not FHA approved. In most cases, to get an FHA loan on a condo, the entire condo… more
What is a VA No No?
share
Most Veterans already know that the VA loan program allows for Zero down financing But what many Veterans don't realize is that they still need to deal with closing costs and prepaid expenses. Depending on the purchase price and date of closing,… more
When is a 5% Down Conventional Loan Better Than FHA?
share
FHA is often thought of as a "first time home buyer" loan program. And while it has been used by first time buyers quite a bit since the mortgage meltdown in 2008 there are reasons why a first time buyer, or move up buyer for that matter.. more
VA Allows for 100% Loan to Value Cash Out Refinancing
share
VA is one of the most unique loan programs available in Orange County, primarily because of a Veterans ability to purchase a home with no down payment up to a price of $687, 500. But what many Orange County Veterans don't realize is that VA also… more
How to Restore VA Loan Eligibility
share
The VA loan program is a great way for a Veteran to buy a home in Orange County since it allows for 100% financing and has no mortgage insurance But what many don't realize is that it can be used more than once. As a matter of fact, there is… more