fha faq's
Is FHA financing complicated?
Years ago, FHA financing was more complicated than conventional financing.
However changes over the years have streamlined the FHA loan process and in many
cases, FHA home loans are easier than conventional financing.
Who qualifies for a FHA home loan?
The program is open to virtually everyone. There are a few restrictions
placed upon credit and residency that may preclude someone from obtaining a FHA
home loan.
Is it true that the down payment can be gifted?
Yes. Current FHA guidelines permit a relative, a governmental agency, or
approved non-profit organization to gift the borrower's down payment. A gift,
according to HUD, is just that--a gift. HUD does not permit the borrower to
repay the gift as a stipulation of giving the gift.
What is the minimum amount of money I need to buy a home with a
FHA mortgage?
The National Housing Act requires the minimum cash investment to be 3
percent of the sales price. Even though the actual down payment may be less
than 3 percent, the balance would go towards the borrower's closing costs. In
the event that there are no closing costs, the down payment would be increased
to 3 percent.
I have had a bankruptcy in recent years. Can I get a FHA loan?
Generally a bankruptcy will not preclude a borrower from obtaining a FHA
loan. Ideally, a borrower should have re-established a minimum of two credit
accounts (such as a credit card, car loan, etc.) and wait 2 years since the
discharge of a Chapter 7 bankruptcy or have a minimum of 1 year of repayment
with a Chapter 13 (the borrower must also seek permission of the courts to allow
this). Furthermore, the borrower should not have any late payments,
collections, or credit charge-offs since the discharge of the bankruptcy. If a
borrower has suffered through extenuating circumstances (such as surviving
cancer but had to declare bankruptcy because the medical bills were to much),
special exceptions can be made (rarely).
Is the upfront mortgage insurance premium negotiable?
No. In order to cover some of the costs incurred by HUD for FHA loans, they
must assess the upfront and monthly mortgage insurance to the home buyer. This
upfront fee equals 1.50% and the borrower will have to pay 0.5% annually in
mortgage insurance premiums. However, if you are buying a condominium, you do
not have to pay the upfront mortgage insurance premium.
How long does it take to receive my MIP refund?
Generally, it takes approximately four to six weeks to receive your MIP
refund if you have sold your home and paid off an existing FHA home loan or
refinanced your FHA mortgage to another mortgage other than FHA. If you
refinance your property to another FHA loan, a MIP refund credit will be applied
to the balance you owe against the home at the time of closing. Former FHA
borrowers who think they might be due a refund can call a toll free number,
1-800-697-6967, or write HUD at P.O. Box 23669, Washington DC 20026-3699. Or you
can look for your name with the
HUD Refund Search Form
How do I find out if a condo or PUD is HUD approved?
You can search online at the following website urls:
Condos: https://entp.hud.gov/idapp/html/condlook.cfm
PUDs: https://entp.hud.gov/idapp/html/subdivlook
