I know that I have written about FHA loans before. This post aims to be a lot less long-winded and more straight to the point. So why should you, Mr./Ms. potential borrower/first time homebuyers, choose an FHA loan?
- FHA loan limits for a 1 unit property are $625,500
- Minimum FICO score of 580
- Permits non-occupying co-borrowers
- 3.5% down payment can be a gift
- 6% seller credit for non-recurring closing costs
What does this mean? Say you are a first time homebuyer and want to purchase a home, but your credit isn’t the best and/or you have little money for downpayment closing costs. The FHA can give you hope. Take the following scenario:
You want to buy a cherry, 1br/1ba condo with a pool/jacuzzi in a desirable mid-peninsula neighborhood.
- Purchase Price: $348,000
- 3.5% Down Payment $12180
- Closing Costs estimated at $8000
- Total cash required at closing: ~$20,000
Now, if you ask the seller to credit back the closing costs (the purchase price is now $356,000, and the seller pays for your non-recurring closing costs, allowing you to finance them as part of the loan) your cash to closing in $12,180. Now, if you have a rich uncle who is willing to gift you the 3.5% downpayment, (thanks, unc) your cash to closing is $0.00. Additonally, the first time homebuyer tax credit ($8,000) and the Mortgage Protection Program are available to help.
Think you can’t afford to own a home, think again. The rates are low, there are right priced homes available (be flexible) and you can qualify for FHA loan with a 3.5% downpayment. For more information, visit my website at www.JosephCapote.com
Filed under: Buyer's Blog, FHA, first time homebuyer, first time homebuyers, low down payment
Joe Capote 