Texas FHA loans
Any loan intended for submission for FHA
insurance has a number of features that
distinguish it from a conventional loan.
The most significant of these features are:
1.
Less stringent quality standards. FHA will
allow re-establishment of a credit within
two years after a discharge of bankruptcy,
when any judgments have been fully paid, any
tax liens have been repaid, or a repayment
plan has been established by the IRS, and
within three years after a foreclosure has
been resolved.
2. Low down payment. The 3% cash down
payment is generally less than for a similar
conventional loan.
3. No secondary financing is allowed for
the down payment. With all Texas FHA Loans
the minimum down payment for the loan must
be paid in cash. The borrower is not
allowed to resort to secondary financing
from the seller or from any lender to make
up any part of the down payment. The FHA
permits the use of either a non-repayable
gift money, credit from a portion of rents
from payable rent/purchase contracts between
a buyer and seller, or some home repairs
made by the purchaser (sweat equity) to be
used to satisfy the 3% down payment costs.
4. Sometimes closing costs may be used to
assist covering the down payment. While a
borrower may not finance any of the closing
costs along with the sales price, FHA
permits the use of some closing cost to
satisfy the 3% down payment requirement.
5. FHA mortgage insurance is required for
the loan regardless of the amount of the
down payment.
6. No prevent penalties are allowed. FHA
loan may be paid off in full at any time
with no additional charges. A lender is
allowed to require that any such payment be
made on a regular installment due date.
7. The property must be owner occupied.
The FHA used to insure investor properties
but they have virtually eliminated all such
programs. Two-to-four unit properties
qualify if they are owner occupied.
Other Texas FHA loans characteristics
The typical FHA loan has a 30-year term.
However, FHA offers long terms as short as
15 years. They also offer adjustable loans
and home repair loans. The rate is fully
negotiable between the borrower and lender.
They still tend to be lower than college
loan rates because the lenders risk is
lessened by the FHA mortgage insurance.
The
lender is required to obtain an appraisal of
the property from an FHA approved
appraiser. The appraisal will note any
health and safety deficiencies and necessary
repairs needed on a validation conditions
form. The lender is required to provide the
buyer with a homebuyer summary of all the
deficiencies noted by the appraiser. All
problems with health and safety conditions,
as well as necessary repairs, must be
completed before the FHA will issue
insurance on the property.
Income qualifications and a maximum loan
amounts
There is no minimum income requirement for
an FHA loan. Borrowers of the show two
years of steady employment and demonstrate
that they have consistently paid their bills
on time. The FHA has a ratio of 29% and
41%. This means that a payment for a home
loan may not exceed 29% of the borrower's
gross monthly income and all installment
debt, including the home loan payment, may
not exceed 41%.
The FHA does set maximum mortgage loan
amounts. These amounts, which vary by state
as well as location within a state, are
adjusted yearly. Texas FHA loans do
however have maximum limits you can find the
current limits
here.
