FHA Loans and the $8000 Federal Tax Credit
A guest post from Rob with MortgageLoanPlace.com:
FHA loans are having a huge year, thanks in large part to the federal government’s $8,000 tax credit for first-time home buyers. Home owners nationwide have seized on the flexibility provided by these low-cost loans, especially in the wake of the credit crunch and overall economic upheaval of the last 18 months.
The FHA’s relaxed credit and income standard have helped thousands of Americans achieve the dream of home ownership. FHA loans come with low down payments and rates comparable to, and often better than, conventional loans.
In all, the FHA will approve more than 1.6 million home loans in 2009. With the $8,000 tax credit extended through the spring, 2010 is already looking like another huge year for government-backed loans.
Today, about two-thirds of all new home buyers are using government loans, most of them FHA, according to a recent survey by a real estate firm in California.
For many home buyers, the benefits of an FHA loan are unmistakable. They include:
-Down payments as low as 3.5 percent
-Some borrowers can finance almost all of their home purchase. A few can finance 100 percent of the home when the FHA loan is combined with
another specialized loan
-Private mortgage insurance (PMI) can be rolled into the overall loan
-There are no financial penalties for pre-payment on the FHA loan
-Higher debt-to-income ratios than most conventional loans
FHA loans also feature less stringent requirements than some conventional loans. Applicants without perfect credit can still qualify, including those who have a history of bankruptcy or foreclosure.
The FHA home loan program operates with lending limits that vary by geography. Higher-cost parts of the country typically have higher loan limits than others. To check the loan limits in your area, visit https://entp.hud.gov/idapp/html/hicostlook.cfm.