There are essentially four types of major financing: Conventional, Jumbo, FHA and VA. Finding the right Federal Housing Administration (FHA) real estate agent, among San Francisco realtors is the first step to finding the right home. I have the knowledge, expertise and resources to get an FHA loan to work for you and get you in that home!
What is an FHA mortgage loan?
It is an insurance program administered by the Federal Housing Administration, under the auspices of the Department of Housing and Urban Development. This program is designed for home buyers that might not meet the more restrictive requirements of conventional financing.
What are the benefits of obtaining an FHA mortgage loan?
- Buy San Francisco homes with as little as 3.5% down!
- Down payment & closing costs may come from a gift or grant.
- Derogatory Credit and lower than average FICO scores are acceptable
- A co-applicant can help you qualify even if they do not live in the home.
- Interest rates are typically lower
- Higher debt to income ratios allowed
- No prepayment penalty if you pay the loan off early.
- Sellers can give up to 3% in closing costs to help the buyer.
- FHA loans are assumable. Meaning a buyer can take over your existing and property if the buyer feels the mortgage rate is favorable to them.
Are there other costs associated with an FHA mortgage loan?
Yes. Effective April 1st, 2012, FHA will increase two fees borrowers pay. You typically have to pay an up-front fee, as well as a monthly FHA mortgage insurance premium. The new upfront mortgage insurance premium will go to 1.75% of the loan amount or $1,750 for a $100,000 loan. It can be financed as part of the loan amount. However, effective January 26th, 2015, the annual mortgage insurance premium for the minimum down payment of 3.5% will go down to 0.85% from 1.30%!
The good news?? On an FHA purchase of $625k, the old mortgage insurance (MIP) would have cost you $703 month! With the new MIP rate, your monthly MIP falls to $443 month! That’s a $3,125 annual savings! And, if you purchase real estate in San Francisco or the Bay Area, buyers are able to finance the upfront mortgage insurance premium into the mortgage.
EXAMPLE of an FHA purchase:
|Loan Amount||3.5% Down||APR||Term||Monthly Payment w/ tax & insurance|
|$460,000||$16,100||4.25%||30 yrs||$3,088 est.|
|$679,650||$23,788||4.25%||30 yrs||$4,518 est.|
How long should I expect to pay the FHA mortgage insurance premium (MIP)?
The buyer is required to pay the monthly MIP, for a specific number of years, based on the loan to value (LTV) calculated at the time of underwriting the loan. On loans closed after January 1, 2001, the MIP will be terminated for a mortgage with a term more than 15 years, provided the MIP has been paid for at least 5 years and have an LTV less than or equal to 78%l or for mortgages with a term of 15 years and less serviced, in which the LTV ratios are 90% and greater and the LTV ratio is less than or equal to 78% and the MIP has been paid for at least 5 years. Mortgages with a term of 15 years and less serviced with a LTV ratio of 89.99% and less will not be charged an annual MIP.
Will FHA give me a loan if my dream home needs work (fixer)?
Yes. If your dream home or home for sale in San Francisco happens to be a fixer, FHA has a loan program called the 203k that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you own and add the cost of the repairs – all into one loan. For a more detailed description of this program, go to: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ 203k/sfh203kc
Are there limits to the amount of home I can buy under the FHA program?
Are there Loan Limits?
Yes. Fortunately, The Bay Area has the highest loan limits in the U.S. Unfortunately, purchasing a home in San Francisco and The Bay Area has become competitive and very expensive.
2018 Bay Area Loan Limits are as follows:
- Alameda – $679,650
- Contra Costa – $679,650
- Marin – $679,650
- Napa – $679,650
- Sacramento – $517,500
- San Francisco – $679,650
- San Mateo – $679,650
- Santa Clara – $679,650
- Solano – $460,000
- Sonoma – $648,600
I want to purchase a condominium rather than a single family home. Are there limitations?
Yes. Well, sort of. If a condominium development is not already FHA approved, there are ways to get it approved, but it may take a while. So, if you want to buy a condominium now, it’s best to make sure the development is FHA buyer approved. The best way to do that is by asking me, as your realtor, to provide you with an approved list of condos or you can search HUD.gov at: https://entp.hud.gov/idapp/html/ condlook.cfm
Once you find a development you like, let me know and I will check to see the availability in that development.
Would you like to know more about the FHA home buying program?
Please go to:http://portal.hud.gov/portal/ page/portal/HUD
Do you have a recommendation of an approved FHA mortgage lender?
Absolutely! Please contact David Belluomini of Wells Fargo Bank by clicking on his ecard below. It has hotlinks to start the application process. David is also an FHA specialist and the two of us have successfully worked on many FHA purchases together, with many satisfied clientele.