FHA | FHA Loans are the future

 

Even though ”Billions of Dollars” are being thrown to Fannie Mae and Freddie Mac, it may be a while before we can feel the impact.  The mortgage industry in the Mid-West has been getting more acquainted with the term “declining market” in recent weeks.  In order to be sure the home you are buying is not in a declining market mortgage bankers must cross reference the investors definition, the mortgage insurance company’s definition, Fannie Mae’s definition, and the appraisal to be certain.  St. Louis is a conservative market, and most investors are considering us declining.  More inventories from increased foreclosures and restricted lending will certainly continue the “declining market” trend, pretty much requiring borrowers to have at least 10% down and 720 credit scores. 

“How do I buy a home with 3% down and credit scores in the 600’s?”

The Federal Housing Administration [FHA] has continued aggressive lending requirements.  Approved FHA Mortgage Lenders can offer home buyers the ability to purchase a home with only a 3% minimum investment.  The restrictions for “declining markets” are not being felt as strongly with FHA loan programs.  There are no set credit score requirements for FHA lending, but the automated underwriting system does not usually approve under 620 credit scores without substantcial compensating risk factors.  The mortgage insurance monthly premium requirement is less than most Fannie Mae comparable loan programs.  Interest rates for FHA lending has been hovering near 6%.  The FHA loans are definitely the answer for the near future when purchaing a home with less than 20% down.