Is it inadvisable to use an FHA loan under the current buying environment? Also, what are the type of properties one can purchase if one uses FHA?

Asked by, Fri Apr 5, 2013

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Christopher…, Agent, Tarrytown, NY
Fri Apr 5, 2013
Hi, The FHA is still extremely popular. The one thing that has changed recently is their upfront mortgage insurance premiums and monthly premiums. They have gone up 4 time over the past 2 years. The upfront is 1.75% of the loan and monthly is being raised to 1.35%. Your loan officer can explain all of the specifics in more detail. You cannot buy a coop apartment with FHA. Single family, multi family, and select condos are fine. The FHA only insures loans for approved condo complexes, you can get the list at…

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Scott Godzyk, Agent, Manchester, NH
Fri Apr 5, 2013
FHA is the most popular mortgage being used today by home buyers. The key for FHA is finding a home that meets it's criteria. A good buyer agent can guide you before you even make an offer. The condition of the home has to be good, FHA will not pass a home that needs work or has safety issues. You can then use a FHA 203k loan but have your loan officer instruct you how it works.
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Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Fri Apr 5, 2013
FHA is a great loan program, as are all others. It's a matter of what your financial situation is when it comes to purchasing a house. For the most part, homebuyers will end up financing with either an FHA loan or a conventional loan. Conventional loans are a bit more strict when it comes to credit scores, debt-to-income ratios, the need for reserves, among other things. Though you can generally go conventional with 5% downpayment, if you're putting less than 20% downpayment, you'll very likely need to also have private mortgage insurance. This insurance is generally much cheaper than the insurance you'll have to carry with FHA, unless your credit scores are in the mid 600s, in which case the insurance is close to what it would be with an FHA loan.

FHA loans are great for those who have lower credit scores, need the flexibility on debt-to-income ratios, no need for reserve funds on a 1-2 family purchase, and allow as little as 3.5% downpayment. Yes the insurance is more expensive, which might result in a slightly higher payment than a conventional loan, but if FHA fits your situation best, it's not a bad option at all. The one thing I can say is that as of June of 2013, FHA will require you to carry this mortgage insurance for up to the life of the loan, which make this loan very expensive. Needless to say, it would be better for you if you had a higher down payment and additional funds for reserves, you'll benefit from a conventional loan.

Today's environment is open to FHA, a great percentage of buyers use FHA financing loans. I strongly suggest you meet face-to-face with a Loan Officer and get pre-approved. I'm always available to meet if you need a Loan Officer to help guide you through all your options. Good luck!

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Javier Meneses
Senior Loan Officer
NMLS #23130
310 Crossways Park Drive
Woodbury, NY 11797
(516) 606-9648
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Anna M Brocco, Agent, Williston Park, NY
Fri Apr 5, 2013
Your loan officer can better advise as to the best loan option for you after he/she has reviewed your overall financials. FHA loans cannot be used for co-op purchases, and it excludes some condos.
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