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WHAT IS AN FHA LOAN? |
| The FHA (Federal Housing Administration) does not make loans. It insures, in the event of a default, mortgage loans made by approved lending institutions. The Department of Housing and Urban Development does issue guidelines and lending criteria for the lenders to comply with. | |
| ADVANTAGES OF FHA LOANS |
- Low down payment
- Less cash from the borrower than on a conventional loan
- Less stringent loan guidelines
- Fully assumable (with qualifying)
- No prepayment penalty
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| ELIGIBILITY REQUIREMENTS |
| FHA financing may be acquired by any qualified person, whether a U.S. citizen or not. However, the property must be borrower's principal residence. The borrower must also have a social security number. | |
| FHA MORTGAGE INSURANCE |
Mortgage insurance is required on all FHA loans. The insurance is collected by the lender and paid to FHA. FHA uses this money to reimburse lenders on defaulted loans. MMI and MIP are the two existing types of FHA insurance. MMI (Mutual Mortgage Insurance) is collected monthly on approved condominiums. Insurance is paid on the remaining balance of the loan only, therefore the payments will decrease gradually over the life of the loan.
MIP (Mortgage Insurance Premium) is a one-time premium calculated as a percentage of the loan amount that applies to Single Family Residences (SFR) and Planned Unit Developments (PUD). This fee can be financed and added to the loan. | |
| FHA LOAN PROGRAMS AND AMOUNTS |
FHA sets maximum loan limits for each county in the U. S. The maximum loan limit for FHA loans is $271,050.00 in Smith County, Texas. Check with us for the maximum loan amount for your county.
There are four loan programs available with FHA:
1. 30 Year Fixed/level payments
2. 15 Year Fixed/level payments
3. 1 Year ARM that has a 1% annual cap and a 5% lifetime cap
4. GPM (Graduated Payment Mortgage) which allows qualifying at a lower rate but deferred interest or negative amortization. | |
| INTEREST RATES |
| FHA does not set interest rates. Rates reflect current market conditions. Discount points need not be paid by anyone, but discount points to obtain a lower than market rate can be paid by either the buyer or the seller. | |
| FHA APPRAISALS |
| Appraisals are performed by FHA approved appraisers. The appraisers are assigned to perform the appraisal by the lender. | |
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| BUYER'S COSTS |
- Down Payment
- Appraisal Fee
- Credit Report Fee
- Recording Fees
- Lenders Title Insurance Policy
- Property tax proration and reserves
- MMI Impounds (escrows) 2 months if a condo
- MIP (can be 100% financed and added to base loan)
- Hazard Insurance for the 1st year and 2 months impounds (escrows)
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| SELLER'S COSTS |
- Tax Service Fee
- Standard Owner's Title Insurance Policy
- Proration of Property Taxes
- Payment of Assessments, etc.
- Structual Pest Control Inspection and Repairs
- Pay off Existing Trust Deed and Liens
- Broker Fees
- Association Transfer Fees
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Let one of Southside Bank's Mortgage Loan Specailists tell you more about the advantages of the FHA loan. |
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Ready to get started?
Click on the Apply Now button below and
provide the requested information. |
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