FHA Loans

At UNIVERSAL TRUST MORTGAGE (UTM) we want to help you understand how a FHA mortgage loan works. In all actuality the Federal Housing Administration (FHA) doesn’t loan any money, they insure it. This means that you’re considered to be a less risky borrower than someone who might not have the backing of the federal government. Our role is to make sure that you qualify for an FHA mortgage and structure our loan to reflect it.

The other pages in the FHA loan center can help you understand more about this unique program. Whether you are trying to determine if you qualify or if you are interested in finding out what kind of documentation you’ll need to ultimately get your loan, our site can provide you the information you are seeking. 

An important resource for considering a FHA loan is the official Housing and Urban Development website. There you can find even more answers to questions and learn more about insuring your loan through the Federal Housing Administration.

There’s a maximum limit to what you can borrow for an FHA loan, and how much you can borrow depends on the county in which your potential home is located.

You can look up the FHA mortgage limits for one or more areas on the https://entp.hud.gov/idapp/html/hicostlook.cfm. The page also includes a median sale price value for each area. Those are the median price estimates used for loan limit determination, according to HUD.

FHA interest rates can be competitive compared to conventional interest rates. This is because the government-backing allows lenders to offer you a lower rate. The rate depends on several factors, including the prevailing interest rates, your income, credit score, the amount you plan to borrow, your down payment amount, DTI (Debt-To-Income) ratio and more.

Your eligibility for an FHA loan doesn't hinge on a particular income amount, but you must prove that you have a steady employment history. Your income must be verifiable by sharing pay stubs, W-2s, federal tax returns and bank statements. We may ask for other examples of verification as well.

FHA VARIATIONS

There are several different types of FHA loans. The type of FHA loan you choose limits the type of home you can buy and how you can spend the money you receive. This makes it especially important to be sure that you’re getting the right type of loan.

FHA - Rate/Term Refinances

Enables you to change the terms of your current loan and replace them with terms that are more favorable for you. A Rate and Term Refinance includes the current mortgage balance plus the cost to refinance.

FHA Streamline

Enables the homeowners with FHA loans to do a rate/term refinance with a few special benefits. To begin with, you may be able to refinance into a lower rate even if you owe more on your home than it’s worth.

Another benefit of FHA Streamlines is reduced documentation. Every situation is different, but because you already have an existing FHA loan, you may qualify for less documentation in each of the following areas:

Reduced appraisal requirements

Limited employment verification

Less documentation for income and assets

When you're applying for an FHA loan the following list of documents will help expedite the process. We can help you understand any part of the FHA loan process so don't hesitate to contact us with any questions.

Employment Info

• Past two years completed tax returns.
• Past two years W-2's, 1099's and any other necessary tax forms.
• One month worth of newest pay stubs.
• Self-employed will need three years tax returns and YTD Profit & Loss Statement.

Savings Info

• Past three months full bank statements for all accounts.
• Any recent statements from investment accounts (retirement, 410k, mutual funds, etc.).

Personal Info

• Driver's License or other official State identification.
• Social Security Card.
• Any Divorce, Palimony, Alimony Documents.
• Green card or work-permit (if applicable).

Check out our list of common questions related to FHA mortgages. Check out our list of common questions related to FHA mortgages.

What is the FHA?

• FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans get into homes.

What makes a FHA insured mortgage beneficial?

• A FHA insured mortgage is easy to qualify for, can be obtained with less than perfect credit, costs less and requires a smaller down-payment.

Where can I find FHA forms and other literature?

• A great source for FHA forms and information is https://www.hud.gov/topics/buying_a_home.

What is the FHA loan limit in my area?

• The loan limit across the country is different. Click here to see limits in your area.

Can I pay an FHA loan off early?

• Yes, however be sure to check the pre-payment section of your contract before signing.

Can a FHA insured loan help me lower energy costs?

• Yes, through the Energy Efficient Mortgages Program you can finance 100 percent of the cost of making your home more energy efficient. Contact us to see how.

Is there a FHA program to help me refinance my loan?

• Yes, the recently created FHASecure is one of the ways that we can help you refinance your current home loan. Contact us now to see what we can do for you.

Can I refinance a fixed rate FHA loan?

• Yes. Talk with one of our professionals today to see if refinancing makes sense for you.

What is the recommended debt-to-income ratio for FHA loans?

• The recommended debt-to-income ratio for a FHA loan is 30%.

Are FHA loans assumable?

• Absolutely, you can assume an existing FHA loan or allow a buyer to assume yours.

Will I have to pay mortgage insurance with an FHA loan?

• Yes, in fact FHA mortgages often require you to carry mortgage insurance for longer than most conventional loans.

Can I get a "fixer-upper" of a home with a FHA mortgage?

• Yes, however you might be required to fix certain problems in the home before you can get the full loan. Speak with us today for details on this.

In order to qualify for an FHA loan, a borrower typically needs to meet this criteria:

• Proven employment status of at least 2 years.
• Steady or increasing income over a 2 year period.
• History of on-time payment. No more than two missed payments on your credit.
• If you've filed for bankruptcy you must wait at least 2 years and have good credit since you filed.
• Those with foreclosures must wait at least 3 years since the most recent foreclosure.
• Monthly mortgage payment should be roughly 30% of your gross income.
• You must pay a minimum of a 3.5% down-payment.
• Agree to 2.25% in closing costs
• Only certain properties are eligible - single-family homes, condominiums, double-wide manufactured homes, modular homes and 2-4 unit properties.
• The property must be your primary residence.

What Is An FHA Streamline Refinance?

If you already have an FHA mortgage then you might qualify for a FHA Streamline Refinance. An FHA Streamline Refinance is a great way for a borrower with an existing FHA backed mortgage to reduce their interest rate, reduce their payment or possibly both.

Here are some really cool facts about an FHA Streamline Refinance:

• No Appraisal is Required – because your loan is already guaranteed by your existing FHA loan, the FHA will allow you to use your home’s original purchase price as your home’s current value.
• You can still refinance even if you are underwater – even if you owe more than your home is worth, you might still be able to get an FHA Streamline Refinance loan.
• There is no FHA prepayment penalty to worry about.
• FHA Streamline refinance rates are the same as “regular” FHA loan rates.
• Employment verification is not required with an FHA Streamline Refinance – in other words, no paystubs, no W-2s or tax returns are required for approval.
• Income verification is not required with an FHA Streamline Refinance
• Credit score verification is not required with an FHA Streamline Refinance – instead of checking your credit, your payment history is used to determine fi you qualify or not. You must have no late payments in the last 90 days and only one or less late payment within the last 12 months.

The Refinance Must Have A "Purpose"

Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance or in other words a legitimate reason for refinancing. For Example:

• Refinancing from an Adjustable Rate Mortgage to a Fixed Rate Loan.
• or Reducing your principal + interest + mortgage insurance 5 percent or more.

Your Loan Balance May Not Increase To Cover The New Loan Costs

The FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges. The new loan balance may increase but only by the cost of the Upfront Mortgage Insurance Premium. All other costs -- origination charges, title charges, escrow -- must either be paid by the borrower as cash at closing, or credited by the loan officer in full.

These materials are not from HUD or FHA and were not approved by HUD or a government agency and in some cases a refinance loan might result in higher finance charges over the life of the loan.