FHA Loans for the 1st Time Home Buyer

By August 11, 2013
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1st Time Home Buyer Tips

It may seem that there are a lot of “rules” to follow when it comes to FHA loan programs, but actually much of it is quite straight-forward, and if you have questions at any point in the process, your FHA Orange County, FHA Los Angeles, or FHA Ventura County lending professional is there to help. Here are a few key facts to keep in mind:

1. FHA loans must be made by a lending institution (such as a mortgage company or bank) that is insured by the FHA. The FHA itself doesn’t loan money or set interest rates, but rather insures loans so lenders are more willing to work with borrowers who don’t necessarily have stellar credit, high incomes, or a hefty down payment.

2. Expect to put up to 5 percent down (maybe more) on your 1st home if you’re going through the FHA program. However, there are exceptions to this requirement, and an experienced lender will help you determine if a smaller down payment is an option for you. In some cases, you may be able to pay as little as 3 or 3.5 percent at closing.

3. For more information on FHA loan programs, talk to your mortgage professional or visit the HUD.gov website, which has all the details about FHA loans as well as tools such as the ability to search for HUD-approved properties and developments.

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A lender who is familiar with the FHA loan process can make the approval process (especially for new housing developments, condos, and other special situations) go more smoothly.

When it comes to FHA Orange County loans, as well as loans in Los Angeles and Ventura County, FHA loan programs make special exceptions, because houses in this area tend to be more costly than those in other parts of California. Unfortunately, Congress recently declined to extend a temporary economic stimulus incentive for “high-cost areas,” so the maximum house price allowed by the FHA is again $625,500 (rather than $729,750) in Los Angeles and Orange Counties, and down to $598,000 for FHA Ventura County loans. However, you can still buy a higher-priced home as long as you can make a larger down payment or pay part of the cost difference.

By choosing a real estate professional who has been through the FHA loans process, you’ll be more likely to have a positive experience in buying your first home.

Home Ownership Tips

If you’re a 1st time home buyer, it may seem obvious that you’re about to embark on a journey that is much different from apartment living or renting a house. Before you sign your FHA loan papers on the dotted line, keep in mind:

1. You’ll need to make sure that your income is sufficient, not just to make the mortgage payment, but to pay property taxes (your lender can probably hold your funds in escrow and do this for you), maintain your home, and deal with any unexpected expenses related to your house or condo. Write out a budget ahead of time, and make sure it includes saving for routine maintenance and emergency repairs.

2. Bone up on your handyman (or woman) skills. When the fence blows down in a storm or the faucet starts leaking, it’s not just a matter of calling the landlord. You’re the landlord! Local and chain retailers such as Lowe’s and Home Depot offer classes for 1st time home buyers and anyone who wants to learn how to do anything from installing a toilet to laying tile. Your local library will have plenty of books to choose from, too.

3. Enjoy your new home! Home ownership is a wonderful thing, and with today’s reasonable FHA loan programs, the dream is in reach for qualified buyers.