Orange County FHA, VA & First Time Buyer Loan Information

The FHA loan limits for Orange County, CA had temporarily dropped from $729,750 down to $625,500 on October 1, 2011. But on Friday, November 19, President Obama signed a new bill that reinstates the higher loan limits for FHA loans in high cost areas, like Orange County and Los Angeles County. FHA, which only requires a 3.5% down payment, offers a solution for families with enough earning power to afford the payment on a $729,750 loan, but haven't a 20% down payment.

Purchase an Orange County Home for $750,000 with 3.5% Down Payment

While a typical Conventional (Fannie Mae or Freddie Mac) loan program requires a 20% down payment to purchase a $750,000 home, FHA only requires 3.5%. The FHA down payment would only be $26,250, versus $150,000 down using a Fannie/Freddie program. Assuming a final FHA loan amount of $730,987 (including the 1% Upfront Mortgage Insurance Premium) at an interest rate of 4% (4.773 APR), the principal and interest payment would be $3,513. The Monthly Mortgage Insurance would be $693. Taxes and insurance would be approximately $937. (Using 1.25% for property tax rate and .25% for insurance rate.) The total PITI (principal, interest, taxes and insurance) would be approximately $5,143. Approximately $3,200 of this is deductible mortgage interest and property taxes. A family with income of $150,000 would qualify for this, depending on their other monthly debt payment and credit. And of course, the income needs to be fully documentable.

It is of course important for a family looking to purchase a home to make sure the new mortgage payment fits in with their budget and future goals. Make sure money is left over for savings, college funding, and meals and entertainment. Also, consulting with a CPA is an important step in determining how the mortgage interest deduction will effect income taxes for the better.

The Perfect Storm - Low Rates and Affordable home Prices

Affordability has not been this good in over 30 years. In many parts of California it is now cheaper to own a home than to rent the same home. This is why so many real estate investors are building their portfolios with single family homes and condos. They are able to rent the home for more than the mortgage payment. Orange County renters who are considering a home purchase should first contact an Orange County lender who can provide custom loan scenarios based on their qualifications and goals. The scenarios should show them a side by side analysis of the different loan options available. Besides the FHA loan program, the VA loan program is also an excellent option, allowing for 100% financing up to a $700,000 home price in Orange County. There are also some high loan to value options available with Conventional financing using Private Mortgage Insurance (PMI). The first step is to investigate all the potential financing options and then determine which is best for you.  

Authored by Tim Storm, an Orange County, CA Jumbo Mortgage Loan Officer MLO 223456– Please contact my office atAlpine Mortgage Planning for more information about an Orange County, CA Mortgage. 949-829-1846. www.OCHomeBuyerLoans.com

Contact us for your Orange County Mortgage:

949-829-1846 | tstorm (at) ochomebuyerloans.com

Most condo projects in Orange County that are approved for FHA financing are going to need recertification after December 7, 2010. That is the date that any condo projects that haven't been newly approved in 2010 will need to either be recertified and fully approved.

Condo FHA Recertification or Full Approval- Which is it?

If the condo project was initially approved prior to January 1, 2000, then a full project approval is required. If the condo project was initially approved on or after January 1, 2000, then the project is eligible for the recertification process. Projects may be recertified beginning 6 months prior to the approval expiration or within 6 months after the approval expiration date. If the project is not recertified within 6 months of the expiration date, then the project will need to be fully approved by FHA.

Why FHA Approval is Important for Condo Projects in Orange County

FHA financing is the primary loan type for first time home buyers in Orange County. FHA only requires 3.5% down payment, and qualifying is flexible compared to most other types of financing. Quite often first time buyers are in the market for a condominium. But not all Orange County condo projects are FHA approved. As a matter of fact, quite a few are not. The condo projects that are FHA approved have a much better chance of maintaining a higher sales value since more Orange County home buyers are able to get financing to purchase these homes. Maintaining FHA (and VA) project approval is important if a condo project is to maintain property values.

How to Recertify an Orange County Condo Project

The recertification package may be submitted by an Orange County FHA Lender, builder/developer, Homeowners Association, Management Company or Attorney or Project Consultant who submits on behalf of one of the previously mentioned parties. Recertification packages cannot be submitted by borrowers, sellers, and/or real estate agents. The easiest way is to have the Condo Management Company proactively submit the package rather than wait until FHA Recertification is needed to close a transaction. Click the link to see the Orange County Condo Recertification Checklist.

Authored by Tim Storm, an Orange County, CA  FHA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan.  877-786-4243 x 7. www.OCFHALoans.com

Call our office today and see how we can help you and your family. 877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com *Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

An FHA loan is a great way for Orange County home buyers to purchase a home with minimal down payment. FHA only requires 3.5% down payment and that down payment can be a gift or come from a 401K. Because of the benefits FHA has over other types of financing, many times homebuyers are under the mistaken impression that there must be strict qualifications for an FHA loan. So what does it take to qualify for an FHA loan?

Income Requirements for an FHA Loan

Having a verifiable source of income is a good start. There are no income limitations or "maximum's", which some "First Time Home Buyer" loan programs have. Although FHA is commonly thought of as a First Time Buyer loan program, you don't need to be a First Time Buyer to use FHA financing. But you do need enough income to afford the mortgage payment. And that income needs to have a history of at least two years in most cases. The lender will also want verify that it is expected to continue. While income from a job is the most typical source, income can also come from alimony, child support, social security, investments, or rental property. FHA will even allow "non occupying" co-borrowers, who must be related to the primary home buyer, to be added to the loan for qualifying purposes.

Basic Credit Requirements for an FHA Loan

While FHA is fairly flexible with credit requirements, its not exactly a "subprime" loan program. Common sense underwriting, at least as far as credit is concerned, would be a better explanation of the credit requirements. While Fannie Mae an Freddie Mac have tightened the FICO requirements in their underwriting guides, especially on low down payment programs, FHA only recently released guidance to lenders for minimum FICO requirements. Even so, most FHA lenders in Orange County require a minimum 620 FICO score. This is very lenient, especially for a loan program that only requires 3.5% down payment.

Down Payment Requirements for FHA Loan in Orange County

As previously mentioned, the minimum down payment for an FHA loan is 3.5% of the purchase price. Unless qualified for $0 Down VA loan, FHA is a very aggressive loan program. This means that an Orange County first time home buyer purchasing a home in Irvine for $400,000 would only need $14,000 for the down payment. The down payment can come from savings, a 401K, and even a gift or even loan, as long as it comes from a family member. If the down payment is a loan, the payments will need to be factored in the "debt to income" ratios for the home buyer. If the down payment is coming from savings, make sure it has been "seasoned" in the bank for at least two months. Any large deposits appearing on the most recent two months bank statements will need to be verified.

FHA Insures the Loan | An Orange County Lender Will Fund the FHA Loan

FHA "insures" the loan, taking absorbing the risks associated with a low down payment loan. This allows Orange County FHA Approved lenders to fund the loan, as long as the loan is underwritten according to FHA guidelines. This is why it is important to work with an experienced Orange County FHA lender who understands the in's and out's of FHA underwriting guidelines. The Orange County FHA lender should be able to quickly Prequalify a home buyer and even offer an FHA PreApproval for free.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

Home buyers in Orange County, CA need to know how a property taxes and insurance impound account works on an FHA loan. An impound account for property taxes and home owners insurance is required on FHA and VA loans. An impound account, also known as an “escrow account”, is essentially a forced savings account held by the lender on the FHA or VA borrowers behalf.

The Amount Collected for Property Taxes Depends on the Month the FHA Loan Closes

Property taxes in California are paid twice a year, in 2 six month installments. The first half taxes are due on February 1 of each year and cover July 1 through December 31. Second half taxes are due February 1 and cover January 1 through June 30. The amount collected at closing to set up the new impound account is dependent on the First Payment date shown on the loan documents. For example, a loan closing in the month of August, lets say August 30, would have a First Payment date of October 1. According to the chart shown below, loans with a First Payment on October 1 should have 8 months taxes deposited into the impound account.

Since the purpose of the impound account is to make sure property taxes are paid in a timely manner, the lender needs to make sure there is enough money in the account when taxes are due. If we assume a loan closes on August 30 and will have an October 1 first payment, then the lender needs to make sure there is enough money in the account only 30 days after the first payment to cover the first half tax installment, due November 1. But the lender will also need to make sure enough funds will be in the account three months later to cover the second half installment. Impound accounts are regulated by law and lenders are allowed to have up to a two month “cushion” to help prevent a shortage of funds in the account.

This all sounds confusing, but is necessary in order to keep the borrower from getting a surprise when property taxes are due. (The surprise may still come in the way of “supplemental property taxes” in the first year after a purchase.)

Home Owners Insurance is also deposited to the impound account. At closing a one year premium is paid, but the equivalent of two months property taxes is also deposited into the impound account. This ensures there will, or should, be enough money in the account 1 year later to renew the insurance.

Orange County FHA Buyers Need to Budget for the Impound Account

Orange County home buyers using FHA or VA financing need to budget for the funds required for the impound account. Both FHA and VA guidelines allow for the seller to pay for the set up of the impound account, which can be the best solution for Orange County home buyers who have saved for the down payment but not closing costs.

It is important to contact an Orange County FHA or VA lender who can prepare customized loan scenarios which will show estimates for not only the amount of funds required to buy a home, but also will give a full breakdown of the purchase price, loan amount, and payment.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Trust One Mortgage Corporation for more information about an Orange County, CA home loan. 877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829

This week VA made an important announcement regarding Condo Approval's that will have a positive effect for Orange County, CA VA loan borrowers. Although the VA is calling this a "clarification", it seems to be an actual rule change for the better. In a nutshell, VA financing is allowed on FHA approved condo projects. For those who have not kept up with the recent condo approval guidelines set forth by FHA, and how VA felt about it, this may not seem like anything. 

www.wordle.net

What Orange County Condo Projects are VA Approved

Prior to the recent FHA condo approval guidelines changes, VA had allowed financing on condo projects even if they were not on the VA approved list. This changed when FHA changed their condo approval guidelines. VA, while not being very clear about their position on this, said they no longer would accept FHA approved condo's. This meant the project had to be on the VA Condo approved list, which in Orange County is fairly limited.

How VA Circular Letter 26-09-19 - (5-17-10) Affects VA Loans in Orange County

This latest VA Circular (a VA Circular is similar to an FHA Mortgagee Letter) announced, or "clarified" their position on FHA approved condo projects.

• VA can accept HUD/FHA/USDA condominium approvals if the project approval was dated prior to December 7, 2009.
• VA cannot accept HUD/FHA/USDA condominium approvals if the project approval was dated on or after December 7, 2009.
• VA cannot accept phases annexed into the project approved by HUD/FHA/USDA if the annexation occurred on or after December 7, 2009...If this is the case, a full review of the legal documents for the entire project must be performed by VA.

This really opens the door for Orange County Veterans looking for condo's who are planning to use the VA loan eligibility. The VA loan program, which does not require a down payment up to a purchase price of $593,750, and has no Monthly Mortgage Insurance like FHA does, is a great program that helps those who served our country. 

How to Find FHA and VA Approved Condo Projects in Orange County.

Both FHA and VA have websites that allow for searching for approved condo projects. Unfortunately it is not as easy as typing an address in and getting a result. And the condo names shown on the VA and FHA websites do not list the address. But it is fairly easy type in a zip code and get a list of the approved projects within that zip code. This is where the help of an experienced Orange County real estate agent and/or Orange County VA lender can really come in handy.

Orange County VA loan eligible home buyers should talk to an Orange County VA loan expert before looking for a home. The lender can get the VA loan home buyer Prequalified and PreApproved (including help with obtaining the Certificate of Eligibility). Once PreApproved, the home buyer can confidently know they are ready to make an offer on a home.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829

Orange County first time home buyers need to be aware of what things they can and cannot do once they have an accepted offer on a home. Even when someone is "PreApproved" by an Orange County Lender, the approval can fall apart quickly if the home buyer is not careful.

4 Things Orange County Home Buyers Should Not Do While in Escrow

1. Do not make any large purchases. Do not purchase a car or boat. Don't even buy furniture or appliances for your new home.
2. Don't apply for new credit cards or installment loans. Inquiries during the loan process could lower the FICO score, which could cause problems if credit is run prior to closing.
3. Do not make any large or unusual deposits into your checking or savings account that can't be properly documented. Even a $500 deposit may be questioned by an undewriter if it didn't come from an employer or obviously verifiable source. Cash deposits cannot be documented and will cause problems if deposited into an account the lender is using to document funds to close.
4. Don't go on vacation or leave town during escrow closing period. While this is not a deal killer, it can cause delays. It typically takes 30 to 45 days to close a transaction, sometimes even longer. If the borrower is not available to get needed documentation or sign disclosures, the resulting delays could cause problems at the closing.

And of course, don't get laid off from your job! That, of course is out of your control but it does happen from time to time.

Fannie Mae will Soon Require a Second Credit Report Be Pulled At Closing

Fannie Mae has announced that effective June 1, 2010, lenders will be required to pull a second credit report at funding.  The lender needs to make sure no new payments are appearing on the credit that would increase the debt to income ratios beyond an approvable level. They will be looking for new inquiries that did not appear on the initial credit report. While this could lead to deals falling out at the last minute, what is still unclear is whether lenders will adjust loan pricing at the last minute based on a drop in FICO score. For example, a borrower with less than 40% down payment and a 720 FICO score could end up with an additional .5 point fee ($2,000 on a $400,000 loan) if there FICO drops 1 point, to 719. There should be more clarity on this issue in the next week.

It is more important than ever that Orange County home buyers be very careful with their spending and credit while in escrow to purchase a home. Make sure to ask your local Orange County loan lender is what things to be careful about and don't keep any secrets.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829

FHA financing on condo's is not as difficult as some believe, as long as the project is on the FHA approved list. But what many Orange County homebuyers and their agents don't realize is not all attached homes are considered a condo.

When looking at an attached home, most people will automatically assume that if the project is not on the FHA approved list for condo's, then an FHA loan will not be possible. At least not until the project gets approved. However, if the property is not legally considered a condo, then FHA will allow financing without the project being approved.

FHA Financing on Planned Unit Development's

A Planned Unit Development, or PUD, encompasses not only Single Family Residences, but also single family attached homes, commonly referred to as townhomes or rowhomes. With a little research, it can be determined whether or not a property was built is listed as a condo or Single Family Residence.

 http://www.wordle.net/.

FHA Financing on Site Condo's

There are also detached homes within Condo projects. Even if the project is not FHA approved, FHA financing can be done on a detached home within the project. A detached condo is typically referred to as a Site Condo. Although project approval is not required, a Condo Rider is still required for the loan. Below is a quick excerpt from a recent FHA Mortgagee Letter regarding Site Condo's.

"Site Condominiums are single family detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership.  Condominium Project approval is not required for Site Condominiums; however, the Condominium Rider (Attachment D) must be included in the FHA case binder submitted for insurance endorsement."

Orange County has quite a few attached home projects which are not "condo's" There are also quite a few detached condo's that will qualify for FHA financing even if the project is not approved. It is important to understand the in's and out's of property eligibility for FHA financing before making an offer on a home. If a property is a condo, then check the FHA website to see if the project is approved. If the property doesn't show up on the list, check to make sure it is a condo at all.

Orange County VA loan eligible home buyers who are shopping for a condo need to check with the VA condo approval website.

Contacting an Orange County FHA Loan Expert is an important step in helping to determine whether a property is eligible for FHA financing.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate ("DRE"), License # 01087829

Just like in 2009, 2010 will be a big year for the FHA loan program and Orange County First Time Buyers. There are several reasons for this, one of them being that there just aren't many competing loan programs.

4 Reasons FHA will Continue to be Preferred by Orange County First Time Buyers

1. Only 3.5% down payment requirement. Other Conventional programs require at least 10% down, as long as the borrowers FICO scores are 740. There are a few niche programs, such as the Fannie Mae Homepath program which is for specific Fannie Mae owned properties, or the VA loan program which allows for 100% financing but is only for VA eligible borrowers.
2. The FHA credit guidelines are more flexible than Conventional financing. Although technically FHA does not require a minimum FICO score, most lenders want the borrower to have at least a 620 FICO. Even if a Conventional buyer has 20% down down payment, they would most likely get a lower interest rate by choosing FHA rather than Fannie Mae/Freddie Mac.
3. Down payment can be a gift with FHA. Not only is the minimum down payment only 3.5%, but the down payment can be a gift from a relative. It can also come from a 401K loan without needing the count loan payment in the debt to income ratios. With Conventional financing, if the down payment can be gift if there is 20% down. If the down payment will be less than 20%, than at least 5% of the purchase price must come from the buyer.
4. FHA allows for higher debt to income ratios. the guideline total debt ratio for FHA is 43%, but for borrowers with just "decent" credit, it is not unusual to get an approval with a ratio as high as 55%. Fannie Mae recently lowered the debt to income ratio they will accept to 45%. With solid compensating factors, such as reserves and perfect credit, Fannie Mae may allow the ratio to be 50%, but again we are assuming 20% down, not the 3.5% the FHA is looking for.

First Time Buyer Tax Credit offers Incentive to Act Fast

With the extension of the $8,000 First Time Buyer Tax Credit, Orange County First Time Buyers have until April 30, 2010 to have a signed accepted contract to buy a home, and then until June 30, 2010 to close the transaction. With property values down to affordable levels not seen in many years, first time buyers are finding they can buy a home for a payment similar to their rent payment. This, combined with the $8,000 "gift" from the government, should result in a lot of Orange County first time buyer activity in the first quarter of 2010.

The First Step is FHA PreApproval

Actually, the first step should be to talk to an Orange County Direct Lender who is an FHA expert. Your lender should be able to prepare loan scenarios based on your qualification and goals which will give you a good idea of what it will take to buy a home. It is important to know how much of a payment you are comfortable with, along with how much money you will need to buy a home. The initial prequalification process can be quick, but the search for the perfect home can take some time. Orange County First Time Buyers who want to take advantage of the $8,000 First Time Buyer Tax Credit need to act quickly.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.

Orange County homebuyers planning on purchasing a condominium using FHA financing have always needed to make sure the condo project they are looking to buy is in an FHA Approved project. Buyers and Realtors can quickly determine whether a project is approved by visiting the HUD website and typing in a project name or tract number. It is even possible to print out a list of approved projects within a city or zip code.  But what happens if a condo project is not on the list? The answer has been to use the FHA Condo Spot Approval Process. The Spot Approval process allowed a lender to close an FHA loan on an individual condo unit within an unapproved complex. However, as of the June 12 release of FHA Mortgagee Letter 2009-19 the Spot Approval is gone.

Why Was the Spot Approval Process Eliminated?

HUD felt that FHA loans were closing on condo's within projects that would not have been approved by FHA. There was a feeling that lenders were "getting one over on FHA". There also has been concern that some complexes have deferred maintenance but are short on reserves and will need to charge a special assessment in the near future.

So What Now?

There is a silver lining. As of this writing there are a lot of condo complexes in Orange County that are not on the FHA Approved list. There hasn't been much incentive for a lender or Realtor to get a project approved when the Spot Approval could be done relatively easy by the lender. Now, in order to close an FHA loan in a non approved project the lender will need to submit a full Condo package to HUD and get the project approved. Once approved, the project will remain on the list for 2 years before needing to be reviewed again. This should help to expand the approved list fairly quickly. In the short run it will mean more work for the lender and maybe a little longer escrow period, say 45 days instead or 30 days (if your Orange County FHA loans aren't closing in 30 days or less then check this out).

What is Needed for Project Approval?

It's really not much different from what was needed for the Spot Approval. A complete CCR package, including the articles of incorporation, bylaws, plat map, budget, reserve study, outstanding or pending litigation analysis, and a special assessment analysis. Also, no more than 30% of the current units can have FHA financing, and at least 50% (it used to be 51%) of the units must be owner occupied.

Don't let these changes scare you away from FHA financing when it comes to a condo. FHA is still the most flexible loan product there is when it comes to down payment (3.5%), where the down payment can come from (gift), and credit (FICO as low as 600). It is just very important to work with a lender or loan officer who has a thorough understanding of FHA.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Frost Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by California Dept. of Real Estate.  Lic. # 01190897

FHA financing has become the primary way to finance the purchase of a home when the buyer has less than 20% for down payment. Why is this? And who should get an FHA loan? There are numerous reasons, but below are some of the primary advantages that FHA financing has versus Conventional (Fannie/Freddie) financing.

1. FHA only requires 3.5% down payment. In California, a "declining market" state, the minimum down payment is generally 10%, though a buyer using Conventional financing with 10% down better have a 740 FICO.
2. The down payment can be "all gift" with FHA. With general Conventional guidelines, a buyer would need to have 20% down payment for the entire down payment to be a gift.
3. No need for approval by an outside Mortgage Insurance company when financing with FHA. For anyone with less than 20% down payment, some form of mortgage insurance will be necessary. In California it has become very difficult for all but the most pristine borrower to get mortgage insurance, even with a 15% down payment.  Private mortgage insurance, even at 90% loan to value for borrowers with a 740 FICO score(if even they can get it), is still more expense than the factor used by FHA. (at least in California, a declining market state.)
4. If the down payment is coming from a 401K, FHA does not count the 401K loan payment in the overall debt to income ratios. Conventional financing does. This can really lower the amount a buyer would qualify for.
5. Non-occupying co-borrowers are allowed with FHA financing. This means a parent or family member can provide help to another family member looking to buy a home.
6. Lower interest rates for borrowers who have FICO scores less than 720 and less than 20% down. As a matter of fact, for buyers whose FICO scores are under 700 on a Conforming loan ($417,00 or less), even with 20% down should consider an FHA. If they are buying a condo the difference is even more in favor of FHA. For buyers who have 20% down on a Agency Jumbo ($417,001 to $729,750), they should at least consider FHA if their FICO drops below 720. If a Jumbo buyers FICO is under 700, FHA may become the better way to go. And once again, if the property is a condo, the differences in favor of FHA will be more pronounced.

Only a year ago FHA loan limits were so low that, at least in Orange County, CA, it was difficult to find a home that fit within FHA limits. Now FHA limits are as high as Conventional. Every deal is different and there are many things to consider. Now more than ever, a buyer needs to make sure they are getting the right type of loan when buying a home. Thoroughly examine each scenario carefully to make sure you are comparing "apples to apples."

Authored by Tim Storm, CMPS, Sr. Loan Officer with Frost Mortgage, a Direct Endorsed FHA Lender located in Irvine, CA. For information on FHA, or to be prequalified please call 877-786-4243 x 7.