Ro Troia

FHA guidelines the whole enchilada

Unless you are in the Real Estate industry most of us probably do not know the differences between conventional and FHA financing.  Also for many years conventional financing has been the most prevalent form of financing but in our changing market FHA financing is starting to become a huge part of our marketplace.  Less than one year ago FHA financing was less than 10% of all the loans given last year now that number is over 40%. So what is the difference between FHA and conventional? 

FHA has much stricter guidelines for the loan conditions but most of the time your interest rates can be much lower than on conventional financing.  Also many homes cannot be financed with conventional financing.  Here are some basic rules to see if your home can be financed through a FHA loan.

1. If it is a condo or town home there must be at least 51% majority owners to renters in the Building.

2. The structure of the home must be in good order no broken windows holes in walls, visible plumbing defects or roof problems.  Even peeling paint on a wall is considered a defect

3. If it is in a mountain or rural area make sure that the road is city or county maintained.

4. Railings on stairs must be at the proper height.

5. Driveways must be maintained and not damaged no large cracks or potential safety issues.

6. Drainage away from the home must be up to code.

7. All siding on the home must not have peeling paint or large cracks in brick work or stucco siding.

So many of you might ask why go through all this trouble for an FHA loan.  Well since FHA loans are considered lower risk for the bank the buyer only needs to contribute 3-3 1/2% down towards the purchase price. Most conventional financing requires at least 5% down and many programs are now at 10 and 20%.  FHA loans are insured by the government so it is a much lower risk for the bank. If you are going to use FHA financing make sure that you do your homework and that the home your are purchasing can use FHA financing.

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This entry was posted on Friday, September 19th, 2008 at 1:22 pm and is filed under Buyer's Corner, First Time Buyers, Market Conditions, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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