The Range of Colorado FHA Mortgage Solutions
FHA mortgages are traditionally considered first time homebuyer mortgage solutions. While FHA is great for first time homebuyers, you can also buy your tenth home with FHA. There are limits, however, to how many FHA mortgages you can have at one time.
As discussed on the previous pages, an enormous amount of flexibility exists with regard to borrower qualifications, and that flexibility is expanded with automated underwriting.
Here are a few examples of how a purchase might be configured to take advantage of the FHA guidelines already discussed.
Zero down with earnest money back at closing
Utilizing an FHA mortgage in conjunction with a "loophole" down payment assistance program the borrower would end up with a zero down FHA mortgage solution. With premium priced closing costs, the borrower's obligation to the purchase transaction would be zero dollars. The result is a refund check in the amount of the earnest money - a great zero down solution for the first time homebuyer.
Variation on a theme
Utilizing a retirement account or gift funds, the borrower brings three percent of their purchase price to closing, and closing costs are premium priced into the interest rate.
Less than perfect credit solution
A borrower who might otherwise be stuck with a subprime mortgage solution qualifies for an FHA loan as a function of all bills being paid on time for the previous year (credit score does not matter). In special cases, a borrower making payments on time for their chapter 13 bankruptcy (as well as having other on time credit for the previous year) may qualify for an FHA mortgage.
Another way to qualify
Utilizing a lender paid two/one buydown borderline borrowers may be approved for a mortgage that would otherwise be out of reach.
Smaller payments with a low interest rate
Utilizing FHA's one year adjustable rate mortgage, borrowers can make smaller monthly payments for the first year of their new mortgage. With five percent down, borrowers can qualify at the starting interest rate, potentially making the difference between being approved and not being approved for a mortgage.
As with all mortgage solutions, talking with your mortgage consultant to clarify your options based on your specific circumstances makes the most sense. It's good to get an idea of the available range of solutions with FHA mortgages here, and always best to talk with a professional for the final word.
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