Durham | NC FHA Expert

FHA Downpayment Going to 5% ??

The US Congress is busy trying to figure out how to regulate the Mortgage Banking Industry so that another Subprime Meltdown never happens, and that is a good thing.

But, they are the Government, so how do you see this working out? Yeah, me neither.

US Congressman Scott Garrett (R-NJ) recently introduced the “FHA Taxpayer Protection Act of 2009.” In his bill, borrowers would be required to make a 5% downpayment on FHA loans, as opposed to the 3.5% downpayment in the current guidelines.

In a Press Release Garrett states:

“Homeownership is a noble goal. However the benefits of Homeownership using government subsidies must be balanced against the potential risk of insuring less creditworthy borrowers and exposing the American taxpayer to that risk. As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage.

I know there are those in this area who believe that Congressman Garrett is on the right track with his Bill… I strongly disagree with you. In the Triangle (RDU area) we are sitting in the middle of 21 Universities and Colleges. We are a mecca for Research and Technology jobs. We are attracting young, hard working, EDUCATED first time homebuyers. And this particular segment of the market is helping us keep our home values in place – because they are buying.

ANYTHING we do to disrupt this current, qualified buyer is a mistake – for ALL of us. We have too much inventory, banks are taking homes back everyday (contributing to that Housing Inventory), we should be ENCOURAGING them to purchase homes – especially now!

If you are interested in purchasing a home in Wake County, Durham County, Orange County or Johnston County, and want more information on qualifying for FHA loans - please call Steve and Eleanor Thorne, 919-649-5058. We are Professional Mortgage Planners with more than 20 years experience and the lowest mortgage interest rates!

Basics to Qualifying for a FHA Mortgage Loan

FHA mortgage loans offers some of the most flexible financing available for today’s home buyers! With FHA, you can purchase a property that’s located almost anywhere, (unlike USDA that has a “footprint” of where you can purchase) and you don’t have to be a Veteran (a requirement for VA home loans ). AND you can use a GIFT for your downpayment!

Here are the Basic Guidelines:

You can Own property somewhere else…. meaning if you move to NC from Ohio (for instance) and you own a property there, you can still qualify for a FHA mortgage loan in NC! (but there are some details you need to remember about using rental income so click here to learn more!)
You can get a Gift for the Downpayment!
We can use income from a Second Job if you’ve had that job for at least 18 months, and/or you have a history of working 2 jobs!
Minimum Credit Scores are more difficult to pin down. In GENERAL – you need at least 12 months of “clean credit,” and no collections or judgements in the last 12 months. I you are new to the credit “game” it’s going to be tough to get a loan, but we do have some investors that will help with “non-tradtional credit.”
Debt To Income Ratios are “loosly” 33/43. This means that based upon your GROSS income, you can have 33% of your monthly income going to your housing expense (which includes Principal and Interest, Taxes, Insurances and HomeOwner Dues, if you have them!). Then you take your Gross Monthly Income and only 43% of your income can be gong to TOTAL debt – which includes the Housing expense above, but it also includes the items which report to the credit report (car payments, credit cards, etc.)
Downpayment is 3.5%!
You do not have to count child care payments! (WHEW!)
You can use a non-occupying co-borrower. This means that if your parents want to help you by being on the mortgage loan, you can use their income and assets to qualify. BIG, BIG, B-U-T here… you can not have sorry credit, and overcome that with a co-borrower.
The maximum loan amount for Wake County and Johnston County in NC is $271,050. The maximum loan amount in Orange and Durham Counties is over $330,000!
You can STREAMLINE refinance to a lower rate FHA Mortgage with minimal costs!