Advantages of FHA Loans

You may have heard about the implosion of the sub-prime market that began in July of 2007. As a result many buyers are now turning to FHA home loans.  The Federal Housing Administration was created in 1934 as an effort to bolster home sales during the depression. By financially guaranteeing loans the FHA lifts much of the risk of non-payment and foreclosure from private lenders. It is important to remember that FHA is not a lender; they just guarantee your loan.

Here are some advantages to using FHA. One, you won't be charged an outlandish interest rate simply because your credit is not perfect. Delegated FHA Underwriters, such as those with Residential Mortgage of South Carolina, can look at your whole financial picture and what created your score to begin with. Perhaps you experienced a medical emergency or a death in the family and have not quite recuperated financially. 
We understand that people are more than their credit score and we will work with you to explain the situation and to build a case that will allow you to buy your own home. Talk to one of our mortgage professionals about how an FHA loan may be right for you today.

  • Bankruptcy is not an automatic disqualification. The bankruptcy must be at least two years old and you must have established good credit since then.
  • Lower interest rates. Normal subprime lenders have employed much higher interest rates in order to compensate for the increased risk of the loan. Because FHA loans are guaranteed, there is substantially less risk for the lender and therefore interest rates are lower.
  • Down payment is required. While many might see this as a disadvantage, making it harder to afford a home, it is also an opportunity. Because a down payment is required the principle on the loan is less. This means there is less interest charged along the life of the loan. Together these both mean that the loan will be paid off much quicker.

  • You are only required to contribute 3% to the transaction and the seller can pay the rest if it is negotiated by your Realtor. It is definitely a buyers market so now is the time to take advantage of this opportunity. Your 3% contribution may be a gift from a blood relative. If you are a first time home buyer, your parents may co-sign on the loan to help your approval.
  • Currently, Down Payment Assistance Programs, such as NEHEMIAH are allowed to be used with your FHA loan. NEHEMIAH will provide your down payment and closing costs in cooperation with the seller.     
  • FHA does require you to occupy the property you purchase
  • You can use FHA to buy a single family home, up to a four unit buildings (as long as you live in one of the units), and condominiums. Condominiums and Planned Unit Developments (PUD's) must be approved by FHA prior to your purchase.
  • There are certain health and life safety repairs that must be completed for final approval on your FHA loan. This is to protect you and your family.

Here are the FHA loan limits for the tri-county area at this time:

   COUNTY               SFR                 DUPLEX            TRI-PLEX         FOUR-PLEX

  BERKELEY           $335,000            $428,850              $518,400             $644,250  
  CHARLESTON       $335,000            $428,850              $518,400             $644,250
  DORCHESTER      $335,000            $428,850              $518,400             $644,250
 
*this is the maximum base loan amount.  MIP is added to the base.


Talk to one of our Loan Officers to see if an FHA home loan is right for you.
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