How do FHA loans work?

Asked by Ashleygr6, Arlington, VA Thu Feb 21, 2013

Does the home you're considering buying need to already be FHA approved OR can any home potentially be purchased with this loan?

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Thomas Young, Home Buyer, Phoenix, AZ
Sat Jun 15, 2013
Purchase new home or renovate your old one with 203k loan.
From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
This shortens the closing time by weeks. Try for more information.
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Ella Blaine, Agent, Mechanicsville, MD
Thu Feb 21, 2013
Most homes can be FHA financed if in a livable condition. Check with your lender some exceptions for Condo's You have some other options if FHA is not for you. VA (vets only) Conventional.
Many Big Banks have their own programs with no money down and no MIP for Buyers with high credit scores.

FHA requires a 3.5 down payment and has a MIP (mortgage insurance premium) added to your monthly mortgage.

If you need a referral to a few good lenders let me know. Just FYI BB&T offers a No Money Down loan program for buyers with credit scores over 700. Wells Fargo have a 2 % down program with a no MIP.

Here's some reading on FHA…

Good Luck!
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Maureen Dwyer, Agent, Ashburn, VA
Thu Feb 21, 2013
From a Realtor's perspective, being qualified for only an FHA loan can limit certain options such as short sales or foresclosures needing too much work although you can then use an FHA 203 construction loan. FHA won't lend on property needing repairs the owner won't make or on condos with too many investors or too many owners in default on condo fees. A kind listing agent will state that the property will not meet FHA requirements so you're not wasting time but FHA does not go out and approve.
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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Thu Feb 21, 2013
FHA doesn’t approve homes, in fact they make you sign a form that says they do not certify the quality of the property only the value. The property must meet some standards in the appraisal process, cannot have safety issue, etc.

Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference:
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Kelly Putz, Agent, Fairfax, VA
Thu Feb 21, 2013
Hi Ashley,

With the exception of condos, where the association has to be already approved by FHA based on owner-occupant levels, any home can potentially be purchased with an FHA loan.

Most loans in the last 10 years have been FHA, and if it weren't for the FHA program most people would not have been able to buy homes after the real estate bubble popped. With FHA, you only have to come up with 3.5% for a down payment, instead of 20% for a conventional loan. There are income qualifications that buyers have to meet, but it's very reasonable.

As far as the home itself qualifying, your lender will have to send an appraiser out for their purposes, but FHA will also send out THEIR appraiser/inspector too. The house must appraise for at least the sales price AND everything in the house that is supposed to work, must work for the FHA inspection to clear. Ex: all appliances must work, plumbing must work, electrical must work and be installed properly (outlets and lights grounded), windows must be operational. My experience has been that an FHA inspection is not as thorough as the buyer's home inspection, but even if there are things that pop up, the seller should fix them so the deal can go through.

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Miekeba Jones, Agent, Silver Spring, MD
Thu Feb 21, 2013
Hi Ashleygr6! Consult a mortgage lender! I know a few.
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Nina Harris, Agent, Williston Park, NY
Thu Feb 21, 2013
FHA has specific guidelines regarding the home you are purchasing. If during the inspection, issues come up that do not meet the requirements for an FHA loan, the home owner would be saddled with correcting the issue/s. The requirements tend to be more stricter than a conventional loan. So in answer to your question, any home can be purchased with this loan but it must meet FHA requirements. Speak to your mortgage broker to get the specifics.
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Jason Skipwo…, Agent, Washington, DC
Thu Feb 21, 2013
Hi Ashley,

Most any home is eligible for an FHA loan as long as it is in livable condition. But there are several FHA loan products you could use depending on the home's condition. A condo has to already be FHA approved for you to purchase with an FHA loan.
I can answer this more in detail. It's best to work with a local lender who has a good reputation in the market you plan to purchase in. I can recommend several lenders to you.
Contact me if and when you want to discuss further. or 202.302.4938.
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