Heejin and I did a presentation yesterday on marketing for real estate agents, based on everything we have seen work and not work with the hundreds of agents we have worked with. It went really well, and if anyone would like to see it, please let us know.
But, this blog topic surfaced after the presentation when we started to field questions about loans. We were surprised that many of the agents in the room still believe that FHA financing requires a Section I termite clearance, and that FHA financing is more difficult in general.
Hence, we are addressing FHA misconceptions again. Here are FHA Facts:
1. Loan Limit: The FHA Loan Limit for a Single Family Residence in a high-cost county (most of the Bay Area) is $636,150. The Loan Limit climbs all the way to $1.22 million for four units.
2. Speed: We can close FHA Loans in 15 Days, easily.
3. Condition: FHA does not require a clear Section I. The condition requirements are the same as they are for conventional loans for the most part. “As Is” transactions are the norm.
4. Down Payment: FHA only requires a 3.5% Down Payment, that can be 100% gift funds.
5. Mortgage Insurance: In most cases, buyers need to pay an upfront fee of 1.75% of the loan amount (that can be financed) and an annual fee of 0.85% of the loan amount. These fees are non-refundable and permanent, in most cases too.
6. Flexibility: FHA financing is far more flexible than conventional with respect to credit and debt ratios, tolerating much lower scores (into the 500s), shorter seasoning periods (2 years for a BK, for example) and much higher debt ratios (up to 56.99%).
7. Interest Rates: FHA interest rates are usually lower than the rates associated with conventional financing.
We love FHA financing b/c of its tremendous flexibility, and recommend it often for all of our borrowers with limited funds.
Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646