Are you looking for an FHA Loan in the San Antonio area but not sure where to begin?
Then look no further – we are your FHA loan experts and FHA financing is our specialty!
Whether you are just searching for more information about Federal Housing Administration (FHA) loans and how they work, looking to buy a new house, or needing to refinance out of an Adjustable Rate Mortgage, our experts are here to guide you in the right direction and answer all your questions.
FHA loans are a type of mortgage financing that is backed by the federal government that helps millions of people each year have the opportunity to be able to by a home without all the strict guidelines that you probably hear about these days.
FHA Loans are:
- Easier to Qualify For
- Don’t Require a Huge Down Payment
- Less-Than-Perfect Credit is Acceptable
- Have Better Interest Rates!
Take advantage now and get a FREE, no hassle quote in under 30 seconds and see what you can qualify for!
What is An FHA Loan?
These FHA loans are mortgage loans that are made by a qualified mortgage lender and have requirements just like the rest of the mortgage programs out there.
FHA Loans are funded by a federally qualified lender, but are insured by the Federal Housing Administration. What this simply means is that while FHA makes the rules on what they will accept and not accept, they are not the ones that lend the money – FHA lenders do.
FHA home loans are so popular because they will allow you to finance your home purchase with having much less than the traditional 20% down.
With FHA, you can buy a home with as little as 3.5% down, which allows for more people to be able to have the opportunity to buy homes.
Although a FHA mortgage is easier to get approved for than a conventional mortgage loan, there are certain FHA loan qualifications that have to be met:
Even though FHA home loans are the easiest type of loan to qualify for, you need to be able to meet these basic FHA loan qualifications.
Here are the basic qualification requirements that are needed:
- 2 years of consistent income. While you do not need to be at the same job for 2 years, we must be able to verify 2 years worth of job history. Gaps in employment can be explained, however those need to be kept at a minimum.
- Acceptable credit scores. Mortgage guidelines change daily so while there is no “specific” credit score that is needed, ideally you should be at least at a 600.
- Down payment. At the moment, 3.5% is the down-payment requirement. You can receieve this as a gift from family or relatives if you do not have it saved up already.
These basic guidelines scratch the surface of what is needed for an FHA loan. There are a few more things that we can go over once you do an application, however there aren’t that much more difficult to meet. Generally, FHA loans are the most popular because the loan qualifications are so easy to meet and opens the doors for millions of families each year. They are specifically designed for the average American that is really looking to purchase a home, however you can also refinance with FHA as well.
If you are looking to get pre-qualified in order to buy a home, your best chances will be with FHA due to the looser guidelines.
FHA Home Loans
Federal Housing Administration Loans, otherwise known as FHA, is a program that is run by the Department of Housing and Urban Development (HUD), and has helped millions of people realize the dream of home ownership in this ever changing mortgage environment. We are here to help answer all your questions, whether you’ve bought a home before, or are a first time home-buyer and just don’t know where to begin.
The process of buying a home can be confusing to a lot of people, even for first time home buyers San Antonio and those that have bought a home before – this is why you need to find the best FHA lenders San Antonio that will lay out everything step-by-step and hold your hand throughout each stage:
- Pre-Approval. This is the first step you need to take in order to find out if you can buy.
- Processing. The next step is to collect all your documents and order the appraisal.
- Underwriting. Verifications are done at this stage to make sure that everything matches up with what is on your loan application.
- Closing. We will send closing documents to the title company and make sure you get the keys to your home!
FHA loans are not particularly credit score driven and because of this, it opens up the doors for millions of people with not so perfect credit so that they can be able to buy a home they can call their own. We truly understand that not every situation is “cookie-cutter” and that each individual person is different which is why we take a personalized approach to your mortgage needs.
Our mission is to help you do what it takes so you can have a place to call home here in the San Antonio area!
If you are looking into buying a home with FHA or have never bought a home before the process may seem complicated, but here at FHA Loan San Antonio, we can help!
Buying a home with an FHA loan is really no different than buying a home with any other loan, except that you have more protection against foreclosure with FHA, it is also easier to qualify, your mortgage insurance will be less and the interest rates are better.
How Much Can You Afford?
What you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate. It’s best to speak with a FHA-approved lender at FHA Loan San Antonio to find out what you can afford. They can also pre-approve your loan there by making it easier for you to then shop for your new home. There are also some online tools you can use, and some tools that your real estate agent can help you with.
You should remember that pre-qualification (an informal estimate of how much you might borrow) is just to give you a preliminary idea of what you can afford, and to identify any major problems that you will want to fix. It’s not a guarantee that you will be approved for a loan-but you will want to get pre-qualified to avoid any surprises.
Start Looking for a Home
Once you know what you can afford it will make it easier for a local real estate agent to help you find homes in the area of your choosing. They will be able to sit down and help you find the home the best suits your needs.
Make an Offer
This process you should discuss with your real estate agent.
If the seller does not accept your offer and makes a counter offer (rejects all or part of your offer), you may need to bargain until you both agree to the terms of the sale. When you plan to finance the purchase of your home with an FHA loan, your sales contract will include the FHA Amendatory Clause. This clause states that if the appraisal (the estimate of the property’s fair market value) comes in at a price below the sales price, you can decide not to proceed with the purchase.
Getting a Home Inspection
Buying a home is one of the most important purchases you will make in your life, so protect yourself by making sure that the home you want to buy is in good condition. A home inspection is an evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-depth and fair look at the property you plan to buy. The home inspector does not estimate the value of the house.
The Inspector’s Job is to:
- Evaluate the physical condition: the structure, construction and mechanical systems
- Find and list items that should be repaired or replaced
- Estimate the remaining useful life of major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.
Home inspections are not appraisals, though.A property appraisal provides an estimate of a property’s market value . Lenders require appraisals on properties before loan approval because they do not want to loan more than the property is worth. The FHA requires lenders to obtain appraisals of properties backing FHA-insured loans. The FHA requires appraisals for three reasons:
- To estimate the market value of the property
- To make sure that the property meets FHA minimum property requirements/standards (health and safety)
- To make sure that the property is resalable.
The appraisal will note problems that are easy to see with the property and non-compliance with HUD’s minimum property requirements/standards. These problems may not be the same as those items noted in a home inspection report.
FHA does not guarantee the value or condition of your future home, and FHA does not perform home inspections. If you find problems with your new home after closing, FHA cannot give or lend you money for repairs, nor can it buy the home back from you. It cannot help you with the builder or seller.
That’s why it is so important for you, the buyer, to get an independent home inspection. Ask a qualified home inspector to thoroughly examine the physical condition of your future home and give you the information you need to make a wise decision. When making a written offer on a home, you should insist that the contract state that the offer is contingent (dependent) on a home inspection conducted by a qualified inspector. You will have to pay for the inspection yourself, but it could keep you from buying a house that will cost you far more in repairs down the road. If you are satisfied with the results of the inspection, then you can proceed with your offer.
As the buyer, it is your responsibility to carefully select a qualified inspector. The following sources may help you find a qualified home inspector:
- Ask your real estate agent. Most real estate professionals have a list of home inspectors they recommend.
- Check with state regulatory authorities. Some states require licensing of home inspectors.
- Find professional organizations. Professional organizations may require home inspectors to pass tests and meet minimum qualifications before becoming a member.
- Look in your phone book. Look under “Building Inspection Service” or “Home Inspection Service”.
- Search the internet. Search for “Building Inspection Service” or “Home Inspection Service.”
Radon Gas Testing
Found in some homes Radon is a natural radioactive gas. Strong concentrations of it can cause serious health problems. The Surgeon General of the United States and the U.S. Environmental Protection Agency, recommend that all houses should be tested for radon. For more information on radon testing, call the National Radon Information Line at 1-800-SOS-Radon or 1-800-767-7236. As with a home inspection, if you decide to test for radon, you can do it before or after signing the contract, as long as your contract states your purchase depends on your satisfaction with the results of the radon test.
National Lead Information Clearinghouse
Many homes built before 1978 have lead paint, and some ingredients can threaten your health. To protect your family, you should be sure to get a lead-based inspection and/or risk assessment. For more information, contact the National Lead Information Clearinghouse at 1-800-424-LEAD or 1-800-424-5323.
The bottom line: Spending hundreds of dollars on inspections may save thousands in the future!
Applying for Your FHA loan
We can help you complete a loan application and have you sign a several forms authorizing the lender to verify (check on) your employment, income and savings. Using that information, we will order an FHA case number, an identification number specifically for your loan application.
After you’ve found a home that you like, we will also order an appraisal to find the value of the property and its condition. An FHA appraisal is no different than other appraisals and at FHA Loan San Antonio we can guide you through the entire process. The lender will also review the appraisal, to determine if the value of the property supports the sales price and to see if any property repairs are required. The lender then makes a decision on your application.
Signing Closing Papers
When all the requirements are met, you’re finally ready to go to “closing” to sign a few papers so you can take ownership of your home.
Make sure you read over everything and to bring valid government issued ID’s as well as any funds that are needed to close. We will let you know ahead of time what is needed so you can have a stress free experience!
FHA Loan Requirements
Understanding the requirements for FHA is very important. While FHA qualifications can vary from lender to lender, these are the basic ones:
- Must have consistent employment history to be able to verify for at least 2 years. It doesn’t have to be with the same employer.
- Must have a valid Social Security Number, provide proof that you have permanent residency status, or show that you are a lawful permanent resident alien living in the United States.
- The down payment requirement for FHA is 3.5% of the purchase price. This can be given to you as a gift from a family member if needed (and documented), but the minimum investment you must have on the transaction in 3.5%.
- FHA loans can only be used for homes that you are going to be living in; investment homes and secondary residences won’t work.
- Your home must be appraised by an FHA-approved appraiser.
- Credit score minimums vary from 580+, but a good rule of thumb is that if you have at least a 600 credit score, then you will have a very good chance of getting approved.
- Usually you must be at least 2 years out of bankruptcy and have shown the ability to re-establish yourself with your responsibilities in terms of credit. Some exceptions can be made due to extenuating circumstances beyond your control, but just keep in mind that is on a case-by-case basis and other factors will be looked at.
- If you have had a foreclosure, 3 years is the waiting period usually. Since FHA is more lenient, exceptions can be made if there were extenuating circumstances, but the FHA lender must look at your entire loan file and make a determination.
One of the most important things is to know what your debt-to-income ratio is.
- Front end ratio. This includes your mortgage payment, mortgage insurance, property taxes, and homeowner’s insurance. When you add all these up, they must be less than 31% of your gross income. This isn’t set in stone and we have seen many more borrowers get approved beyond this number, so that is why it’s best to get in touch with us.
- Back end ratio. This number is your mortgage added to the rest of your monthly debt. Take all your minimum payments for credit cards, card payments, student loans, etc, and after you add this to your mortgage, this number must be less than 43% of your gross income. Again, this isn’t the end-all-be-all and you can go higher, but it will depend on other compensating factors.
FHA Loan Limits 2014
FHA Loan Rates
Just like with any type of financing, you want to make sure that you get a payment as low as possible and that also meets your needs. At FHA Loan San Antonio, we have the lowest possible FHA rates to help make your mortgage payment as affordable as possible.
FHA rates change daily just like with any other type of mortgage product, yet many loan officers don’t even understand how they work.
Here’s a cool video that explains everything:
To make it simple, if you look to the right of our page, we have pulled in the current average FHA mortgage rates in Texas at the moment. These update daily for the most part, however if you’d like to get a free quote, I’m here to help price everything out for you.
FHA Loan Calculator
FHA First Time Home Buyer
If you are an FHA First Time Home Buyer and looking to apply with the FHA mortgage program, FHA Loan San Antonio can help hold your hand throughout the entire process.
If you are a first time home buyer, the time has never been better to explore financing through the FHA loan program. With sub prime loans gone in the market, many first time buyers are left with questions about what is the best option for them. FHA loans may in fact be the answer. While FHA mortgages haven’t been as popular in recent years because of the perceived amount of bureaucracy associated with obtaining a home loan backed by a government entity such as the HUD, new legislation is in the works to help make them more consumer-friendly.
First time home buyers represent a large share of the lending market and they receive a lot of attention. Many do not have established credit histories or a lot of money to put down for a down payment (because they are usually fresh out of college or still early in their careers). Currently, FHA loans require a 3% down payment to obtain financing and have different loan limits in each county. Apply now to obtain more information about the limits and down payment requirements in your area with American Home Front Mortgage. The FHA might just be the answer for your home mortgage.
Credit score – One of the primary market benefits of an FHA loan has always been that credit scores were not a factor. A borrower with great credit scores could definitely have their loan approved more easily, but someone with some credit problems could still get approved – provided they had a well documented common sense explanation for their credit problems and could show that the problem had been resolved. In spite of not relying on credit scores, FHA foreclosure rates went down while conventional mortgage foreclosure numbers went up in spite of their almost excessive reliance on credit scores. The FHA underwriter will evaluate the entire credit profile to determine the borrower’s likelihood of repayment. Past credit issues may be overlooked if new credit has been re-established. Also, other compensating factors may apply. Generally a credit score of 580 is needed for automated approval and a few banks will underwrite a file with scores as low as 540.
Bankruptcy okay – Chapter 7 bankruptcies are allowed if discharged over 2 years ago (or 1 year with extenuating circumstances). Chapter 13 bankruptcies are allowed with a minimum of 1 year of on time plan repayment and trustee approval.
Little or No Money Needed – FHA loans allow the seller to pay up to 6% of the sales price toward the closing costs. In addition, Congress has for the time being eliminated Down Payment Assistance programs. There is a movement in the legislature to reinstate these community programs. You can however receive a gift from a family member for the down payment. Give your loan officer a call to find up to date guidelines concerning down payment assistance.
Housing History – FHA does not require a rental or other housing history if it is not available.
Non-occupying co-borrower allowed – FHA allows a non-occupying relative to co-sign the mortgage. The non-occupant’s income and assets can be used for qualification purposes. This is generally used for parents to help their children buy a home. The name for this is the “kiddy condo loan”
Property types – 1-4 unit, condos, town homes, modular homes, and manufactured homes.
No cash reserves required – Unlike most conventional loans, FHA does not require you to have cash reserves on 1-2 unit properties. A borrowers profile is graded on an FHA score card. The FHA score card takes into consideration income, assets, job tenure, debt to income ratio’s and credit scores. Having reserves can help strengthen the overall credit profile.
Fixed Rate Purchase When purchasing a home, an FHA loan is often the right choice. This is especially true if any of the following are true: You are putting less than 20% down
- You are buying a 3-4 unit property
- You have less than stellar credit
- You need a cosigner
- You want a low, stable rate
- Your credit score is under 740
FHA fixed rate loans are the most popular programs for FHA financing. Unlike an adjustable rate mortgage, your payment will stay the same for the duration of the loan. Since FHA loans require only a 3% down payment, and allow the seller to pay up to 6% of the purchase price towards the closing costs, you can often buy a home with as little as 2% since your Earnest Money can be applied to your funds to close. Keep in mind you still have to show the bank you have the 3% for the down payment.
FHA Streamline Refinance
FHA Loans are also very popular among home-owners who were initially placed in a high interest rate sub-prime loans and looking to get out them by lowering their rate.
Programs such as the FHA Streamline Refinance program have helped millions of people save money on their mortgage and all without even requiring an appraisal! For those that have been hit by falling neighborhood home values, this tends to be a very good fit and allows you an opportunity to save some money each and every month with very little risk.
If you are looking to take advantage of this, we can help guide you in the right direction and provide you a variety of information so that you can start lowering your monthly payments and put you on a plan to start putting some of that money back in your pocket!
FHA fixed rate loans are the most popular programs for refinancing. This is where you have stable predicable payments each month and as a result offers the most security for yourself and your family. If you are currently in an adjustable rate mortgage (ARM) and would like the security of a fixed rate, a fixed rate FHA is the right program for you.
About FHA Refinancing
An FHA refinance is a very similar process to refinancing using conventional financing. In fact, both loans require almost identical paperwork. FHA is actually has cheaper mortgage insurance than conventional.
The process generally involves the following steps:
That whole process generally takes no more than 30 days. One nice advantage of refinancing is that you are allowed to skip one month of your mortgage payment after you close. Depending on when in the month your mortgage closes you can possibly not make the current mortgage payment and skip the following month as well. You can use this money to payoff another bill, fix up your home, or even go on vacation.
If you are looking to refinance and want the best rate and terms, and want an easy process with more favorable guidelines, an FHA refinance loan is probably the best choice for you.
FHA Streamline Refinancing
An FHA Streamline Refinance allows you to refinance your current FHA loan into another FHA loan. An FHA Streamline allows you to:
- Refinance into a lower rate and payment
- Convert you FHA ARM into a fixed rate
- Convert you 203(k) rehab loan into a 203(b) FHA loan
- Shorten you loan term
There are several benefits to an FHA Streamline Refinance.
Generally, no appraisal is necessary. There are also no credit restrictions on an FHA Streamline refinance. You income and employment are also not evaluated when applying for an FHA Streamline loan.
There are only a few requirements to obtaining an FHA Streamline loan, they are:
- You must have been in your current FHA loan for a period of at least one year
- Your current FHA loan must be current at the time of closing the new FHA loan
- The new FHA loan must offer a lower payment or shorten the term without increasing your payment by more than $50
- If current FHA loan is an ARM, and the new loan a fixed, the interest rate on the new fixed loan may not be more than 2 percent higher than that of the ARM
FHA Loan FAQ
Here is a list of the most common FHA loan FAQ that we get at FHA Loan San Antonio. If you have any more questions, we’re just a phone call away!
How Can FHA Help Me Buy a Home?
An FHA insured mortgage offers many benefits and protections that only come with FHA:
- Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
- Less than Perfect Credit: You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.
- Low Down Payment: FHA loans have a low 3% down payment and that money can come from a family member.
- FHA can Help You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.
- FHA fixed interest rate mortgages cost less. FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a sub-prime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments.
- You don’t have to have perfect credit to get an FHA fixed rate mortgage. Even if you have had credit problems, such as a bankruptcy, you may still qualify for an FHA mortgage. Should you encounter hard times after refinancing your home, FHA has programs to help you keep you in your home and avoid foreclosure.
Do I Have to be a First Time Home-Buyer to Qualify?
Absolutely not. Anyone is eligible for an FHA loan as long as the loan is on a primary residence. Even if you have had FHA loans in the past, you are still eligible for FHA financing.
How Can I Improve my Credit Score?
There are many ways to go about improving your credit score.
First you want to obtain a copy of your credit report. Often there are old on incorrect items on a credit report. Secondly you will want to look at balances on different accounts. The credit bureaus like to see the amount owed on a debt at 60% of the max limit or less. Keep in mind by law debts have to fall off 7 years after they are placed on the credit report. You also want to limit the amount of times that your credit is pulled by creditors. Luckily, mortgage companies and automobile dealership inquiries are treated a little differently, so they do not impact your credit as much as some others like credit card inquiries. The other option to improve your credit is to remove the negative and incorrect items from your report. This is most successful when working with a credit repair company. These programs generally take between 45-90 days, and can have a significant impact on your credit score.
Are FHA Rates Higher than Conventional Rates?
No, in fact, they are often lower than similar conventional loans. Because the Federal government insures your loan, lenders are able to offer very competitive rates. FHA also doesn’t increase your rate based on your down payment, so you get the same rate whether you put 3% down, or 20% down. This is not the case with conventional financing.
Does FHA allow for seller paid closing costs?
FHA will allow the seller to pay up to 6% of the purchase price toward the buyer’s closing costs. This is called a seller’s concession. Most conventional loans only allow a 3% concession.
Can I Get Down Payment Assistance?
At this time the only a gift can come from a relative. A new law was passed by Congress H.R. 3221, privately funded down-payment assistance (DPA) is eliminated as of October 1, 2008. Yes: There is an initiative the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694), a bi-partisan bill introduced by Congressmen Green, Miller and Shays and Congresswoman Waters in July, would overrule this move and reinstate DPA indefinitely. As of this moment it has not passed and the elimination of programs such as Nehemiah which would allow for a gift funds from the seller up to 6% towards your down payment and/or closing costs have taken place. These funds could have been used for first time and repeat home buyers. HUD does provide funding to state and local governments for this purpose. To find out what programs you may qualify for, please contact your city, county or state government. You may wish to visit the following web site to find local housing programs in your state or local area.
Hopefully, you learned everything there is to know about FHA loans in the San Antonio area. I’m always here to help, so if after reading this entire guide you still have more questions or would like to get a quote, I’m just a phone call away!