Jumbo Loans

An FHA loan is a loan guaranteed buy the Federal Housing Administration (FHA) against default by the borrower. There are limits to the amount that can be borrowed, dependent on the area the house is in, but they are large enough for the purchase of a moderately sized house almost anywhere in the country.

The Federal Housing Administration (FHA) doesn’t make mortgage loans rather they offer insurance to approved lending institutions who do grant mortgages. Approved lending institutions include banks, saving and loan associations, credit unions and mortgage companies. Because each lender sets their own terms and rates it is important for borrowers to shop around for the best deal.

Because the loans are guaranteed; the lender takes on much less risk and is able to offer mortgages with:

• Low interest rates
• Low down payments – as little as 3%
• Low closing costs
• Easer credit requirements

Any qualified person may apply for FHA mortgages. However:

• The property must be the borrowers principle residence
• The borrower must live in the home
• The borrower must have a Social Insurance Number
• The borrower must be eligible to work in the United States

• The FHA will want to see one to two years of good credit history. If there is a problem a letter explaining what it is may help you to become eligible. If you haven’t yet got one to two years of credit history then alternate forms of credit, such as loans and utility bills, may be sufficient.
• Any bankruptcies must be at least two years past. However, a letter of explanation may reduce the time requirement if the reason was beyond the control of the borrower.
• You must be able to show employment records for at least two years and have sufficient income to make the payments. Lenders usually want your debt load to less than 28% of your gross monthly income.
• You must have at least 3% of the homes value saved. If this 3% is a gift you must provide a letter stating that no repayment of the “gift” is expected.