In a market where housing prices are becoming more affordable, guidelines for other mortgage products have become tighter, and where sellers are cooperating more than ever, FHA insured mortgages have emerged as a great choice for buyers looking for financing.
Among its benefits, FHA allows for a maximum of six percent of seller contribution towards closing costs and prepaids. This means that buyers are able to negotiate deals where the seller pays the initial twelve month prepaid homeowner’s insurance premium, for example. At this moment, a buyer must contribute a minimum three percent of the sales price as down payment under FHA guidelines. However, that three percent may come from a grant, a community soft second mortgage, a down payment organization or a gift from a family member. That sounds an awful lot like 100 percent financing!
Here are some highlights:
The FHA loan limit has been raised to $423,750 in Miami Dade and Broward counties and as high as $729,750 in areas of Key West and Marathon, FL.
There have been some changes to FHA funding fees and mortgage insurance structure. It used to be that all FHA borrowers paid an upfront fee of 1.5 percent plus annual mortgage insurance payments. With the new structure, FHA loans have become less expensive for borrowers with good credit than for those with low credit. For more information on the new risk based pricing adjustment click here: https://www.ewmrealestate.com/blog/2008/07/21/mandatory-fha-loan-fees-drop-for-some-increase-for-others/