FHA Loans

What is a FHA Loan?

 

Families can now buy their dream home after being excluded from the housing marking. This is in thanks to the Federal Housing Administration (FHA). In 1934, the Federal Housing Administration was established to improve housing and to provide an adequate home financing system.

FHA does not create home loans, it insures the loan. If for some reason the homebuyer defaults, the lender is paid from the insurance fund.

  • First-time homebuyers who are unable to make larger down payments.
  • Buy a house with as little as 3.5% down.
  • Assistance programs for down payments can be added to the FHA loan for additional savings.
  • For those who may not qualify for a conventional loan, this may be the right mortgage solution.

FHA Loans vs. Conventional Home Loans

A Conventional Bay Area Home Loan relies upon credit scores. If your score is below the minimum standard, you may not qualify for a loan. A FHA Bay Area Home Loan requires a lower down payment and the credit qualifying criteria isn’t as strict. This allows borrowers who may not have any credit history, or with minor credit problems, to qualify for the loan. The FHA requires an explanation of any derogatory items, this will be used for credit underwriting.

If I’ve Had a Bankruptcy in Recent Years, Can I Get a FHA Loan?

Yes, in most cases bankruptcy won’t preclude a borrower from obtaining a FHA loan. The borrower should not have anything in collections, late payments, or credit charge-offs since the bankruptcy. Exceptions can be made for any borrower who has suffered through extenuating circumstances such as having to declare bankruptcy because of high medical bills or surviving a serious medical condition.

 Ideally, a borrower shall re-establish their credit within a minimum of two credit accounts. This can include a car loan or a credit car. Then wait two years after the discharge of a Chapter 7 bankruptcy, or a minimum of 1 year after repayment for a Chapter 13 (the borrower would seek permission from the courts).

What Documents are Needed to Apply for a FHA Loan?

Your Bay Area loan approval depends 100% on the documentation that you provide at the time of application. You will need to give accurate information on:

 

Employment

  • Complete Income Tax Returns for past 2-years
  • W-2 & 1099 Statements for past 2-years
  • Pay-Check Stubs for past 2-months
  • Self-Employed Income Tax Returns and YTD Profit & Loss Statements for past 3-years for self-employed borrowers

Savings

  • Complete bank statements for all accounts for past 2-months
  • Recent account statements for retirement, 401k, Mutual Funds, Money Market, Stocks, etc. 2 month history

Credit

  • Landlord’s name, address, telephone number, or 12- months cancelled rent checks
  • Recent utility bills to supplement thin credit
  • Bankruptcy & Discharge Papers if applicable
  • 12-months cancelled checks written by someone you co-signed for to get a mortgage, car, or credit card, this indicates that you are not the one making the payments.

Personal

  • Drivers License
  • Any Divorce, Palimony or Alimony or Child Support papers
  • Green Card or Work Permit if applicable
  • Any homeownership papers

Refinancing or Own Rental Property

  • Property Tax Bill
  • Hazard Homeowners Insurance Policy
  • A Payment Coupon for Current Mortgage
  • Rental Agreements for a Multi-Unit Property
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Disclaimer: Information contained herein is provided to assist real estate professionals and is not an advertisement to extend consumer credit as defined by section 1026.24 of Refulation Z. BlueCrest Mortgage, a California Corporation, NMLS ID 1930841 https://www.bluecrestmtg.com