What is Fannie Mae Home Path projects and whats the difference between that and a F.H.A. Home Loans?

Asked by Tamera, Rogue River, OR Wed Mar 28, 2012

We would like help to fix up this property and then to turn it into a business for possible Elderly Foster Care. We need all the help we can get to build up our credit and hope to be doing this through this project!

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VM, , 80003
Wed Mar 28, 2012
- HomePath Financing is only for Fannie Mae foreclosed homes. FHA financing is for any home.

- FHA loans have both upfront mortgage insurance and monthly mortgage insurance. This adds about 1% to the loan amount and for every $100,000 you borrow it adds $95.83 a month to the principal and interest payment.

- HomePath loans have no mortgage insurance.

-Because HomePath has no mortgage insurance, Fannie Mae charges higher interest rates. The less you put down the higher the interest rate. FHA rates are the same regardless of how much you put as a down payment. So the more you have/want to put as a down payment the better you are with HomePath vs. FHA.

-FHA loans require an appraisal. This can frequently cause problems since FHA loans require the property to be in good condition prior to close. For this reason Fannie Mae and other sellers will frequently not accept FHA loan financing or it will be considered behind HomePath financing in terms of desirability.

-HomePath loans require a 660 middle credit score or higher

-FHA loans require 640 middle credit score or higher (Loans over $150,000 can go down to 580 credit score)

-HomePath loans have more strict guidelines on debt ratios. FHA will allow you to qualify for a higher purchase price than HomePath.

-HomePath loans require a minimum down of 3%

-FHA loans require 3.5%

Both loans are great, and either will make you happy. However, HomePath loans will give you a lower overall payment even though interest rates are higher than FHA. This is because FHA loans have very expensive mortgage insurance and HomePath loans don’t. However, not all properties qualify for HomePath financing. Plus you may need the greater flexibility of FHA debt ratios and credit scores.
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