FHA Loan Information 2014

What is an FHA loan?

The Federal Housing Authority guarantees loans all over the country which allow small down payments – as little as 5. Owners do not need to be first-time buyers, and credit scores can be as low as 620.

There are some restrictions on the condition and type of properties that FHA will lend on. If you are purchasing a single family home, it must be in fairly good condition. If it is not in good condition, the seller will need to make certain repairs before the close of escrow.

If you are purchasing a condo, the whole building needs to be approved by the FHA, even if it a very small building with only a few units.

What are the loan limits on FHA loans in the San Francisco Bay Area?

  • $729,750 for single family home (or condo)
  • $934,200 for 2 units
  • $1,129,250 for 3 units
  • $1,403,400 for 4 units

FHA Loan Information 2014
What are the pros and cons of FHA loans?

Pros

  • Interest rate is lower than market rate
  • Some guidelines are more flexible
  • Credit scores can be lower — much lower
  • Can be structured to cover most of your closing costs
  • No prepayment penalty, so it can be your short-term plan

Cons

  • Monthly PMI adds 1.75% to the interest rate
  • As of 2013, PMI must stay with the loan for the entire 30 years — it cannot be removed regardless of the home’s equity
  • Debts of spouse must be included in ratios even if spouse is not on the loan
  • Appraisers look more closely at defects in the property

Why Wait?

Start the loan process today using our secure online loan application.

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