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March 27, 2006 |
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FHA & VA Financing - Still Going Strong
For qualified customers who seek a financing program with more flexible credit requirements, FHA or VA mortgage programs may be just the answer to their financing needs. More generous credit guidelines, minimum down payment requirements and fewer restrictions on the source of funds a buyer brings to the closing table can make FHA or VA mortgage financing the right choice when matched with the right homebuyer.
VA and FHA mortgages continue to occupy a small but steady niche; according to the Department of Veterans Affairs Annual Performance and Accountability Report for Fiscal Year 2004 (the most current year for which statistics are available), the VA guaranteed 335,800 loans.
What’s more, the ceilings of FHA and VA loans are up substantially for 2006, good news for buyers in a market that’s risen dramatically over the past several years, and especially good news for first-time homebuyers who choose to go with an FHA or VA program.
Customers who seek FHA financing must meet the minimum cash investment of three percent of the purchase price. Fixed and adjustable rate programs are available, and all offer a low down payment. FHA loan limits vary according to geographical area. As with conventional programs, financing limits are higher for properties with multiple units – from two to four units with at least one unit owner-occupied.
Some of the advantages to mention to your customers about FHA financing include:
• FHA loans are fully assumable, subject to qualification
• Qualifying ratios are 31/43
• Sources of funds for closing can include properly documented cash on hand or money from undocumented sources, such as a gift from a friend or relative
• Alternative credit will be considered in making an approval decision
• No prepayment penalties
VA loans can be just the ticket for an active or former member of the armed forces who meets eligibility requirements, including a widow or widower whose spouse's death was service related, and an MIA or POW spouse who meets the requirements. Both VA fixed and adjustable mortgages offer 100% financing without traditional mortgage insurance and the ability to roll in the VA funding fee, for a total of up to 103% LTV.
Some of the advantages of VA financing include:
• Equal opportunity for all qualified veterans to obtain a VA loan
• Ability to finance the VA funding fee
• Closing costs compare favorably with other financing programs
• No mortgage insurance premiums
• A mortgage that’s assumable
• No prepayment penalties
To find out more about what customers seeking VA financing are learning from the Veterans Administration, visit www.homeloans.va.gov/veteran.htm
If you have customers who are wondering whether FHA or VA financing is right for them, tell them to contact me. I will help them choose from among 150 of our industry-leading products to find home financing that’s right for them. They’ll also appreciate our Four to the Door® four-step mortgage program and same day loan decision, all backed by the strongest guarantees in the industry.
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