What is an FHA Loan?

The FHA loan is a great option for homebuyers with less than perfect credit and/or limited funds available to them. The program was developed in order to provide an alternate means of accessing the high standards set by conventional loans, while still allowing room from qualification requirements that can be challenging on those who have been approved before but want something different now because their circumstances may have changed since then.

Do I qualify for an FHA loan in Texas?

You’ll need to satisfy a number of requirements to qualify for an FHA loan. It’s important to note that these are the FHA’s minimum requirements and there may be additional stipulations.

Credit score

The minimum credit score for an FHA loan with Trinity Oaks Mortgage is 600. Though the FHA has not changed its requirements, the combined effects of the COVID-19 pandemic and recession have led many FHA lenders to raise their minimum required credit scores for FHA loans.

Down payment funds

If you’ve got a credit score of 620 or higher, your FHA down payment can be as low as 3.5%.

The good news? It doesn’t all have to come from savings. You can use gift money for your FHA down payment, so long as the donor provides a letter with their contact information, their relationship to you, the amount of the gift, and a statement that no repayment is expected.

Debt-to-income ratio

The FHA requires a DTI of less than 50, meaning that your total monthly debt payments can’t be more than 50% of your pretax income. This includes debts that you aren’t actively paying.

For student loans in deferment, your FHA loan underwriter will include 1% of the loan’s total as the monthly payment amount. For other types of loans that you aren’t currently repaying, underwriters will use 5% of the loan’s total to calculate your DTI.

Property approval

The property you’re trying to buy with an FHA loan, whether it’s a house, a condo, a manufactured home, or a multifamily home, has to meet FHA minimum property requirements.

The FHA requires an appraisal that’s separate (and different from) a home inspection. They want to be sure the home is a good investment — in other words, worth what you’re paying for it — and ensure that it meets basic safety and livability standards. If the appraisal comes in lower than what they need to borrow, they would be responsible for coming up with the difference OR they may be able to use that to negotiate a lower price from the seller. 

Today, most contracts are being written with the buyers waiving the right to negotiate the price if the value comes in low. In that case, the buyer would be responsible for paying for it. When the markets shift back towards a buyers’ market then there may be options of re-negotiation.

Mortgage insurance

FHA mortgage insurance is built into every loan. When you get an FHA mortgage, you’ll make an upfront mortgage insurance payment (which can be rolled into the total amount of the loan) and make monthly payments thereafter. If you put less than 10% down the MI will remain for the life of the loan. But, with 10% down or more then the MI will remain on for only 11 years.

• As low as 3.5% down payment

• Upfront mortgage insurance may be financed or paid in cash

• Ability to choose from fixed- or adjustable-rate terms

• Closing cost paid by the seller is 100% negotiable, but a seller is not required to pay any cost towards the buyers closing cost.

• 100% gift funds – the entire 3.5% down payment can be a gift from parents, relatives or an employer

• Flexible credit qualifying – because it is government-backed, lower credit score thresholds are in place

• May also be an option for borrowers with limited equity looking to refinance.

Find out more and see if you are eligible for an FHA loan from your Trinity Oaks Mortgage Loan Advisor.

Are you interested in applying for an FHA Home Loan?

Trinity Oaks Mortgage, one of the area’s leading mortgage lenders has vast experience in dealing with USDA Rural Development loans in Texas. We’re available to answer any questions, help determine if you are eligible, and guide you through the home loan process.  

APPLY NOW

If you or someone you know is interested in securing FHA financing, let’s talk! Submit the below form and we will connect you with one of our expert Loan Advisors near you.  

The post Introduction to FHA Loans appeared first on Trinity Oaks Mortgage.

What are USDA Home Loans?

They are mortgages issued by approved Rural Housing Service (RHS) lenders like Trinity Oaks Mortgage, nationwide. What’s popular about these loans is that if you meet certain requirements, then you could be approved for 100% financing, more lenient eligibility requirements and competitive interest rates – due to the loan being guaranteed by the USDA.

Who should consider a USDA Home loan?

If you’re a qualified homebuyer who lives in a rural area as defined by the USDA or an eligible Native American Indian and want to buy your own home, then taking advantage of USDA home loans may be right for you!

They are considered ideal for applicants with less-than-perfect credit or limited assets as they help provide maximum financial support to borrowers.

What are the benefits of a USDA Home Loan?

USDA loans offer several advantages over conventional mortgages. The down payment requirements for USDA loans are often much lower than other mortgages, leaving borrowers with more money in their pockets at closing. Also, interest rates tend to be lower than they would be on a conventional mortgage due to federal subsidies attached to these low-cost loans. 

How can you qualify?

The U.S Department of Agriculture requires that all applications for USDA debt be processed through local lenders/banks, which is what Trinity Oaks Mortgage does day in and day out for our clients.

To qualify for a USDA home loan, an applicant must meet the following requirements, as determined by USDA Rural Development:

• The applicant must be a United States Citizen or permanent legal resident.  
• The applicant must have a valid Social Security number or proof of application for one.
• The applicants’ annual household income must not exceed USDA’s limits. Applicants with incomes higher than USDA limits can still qualify for USDA Rural Development programs, but will likely need to go through an additional approval process.
• The applicant must be able to demonstrate that they have adequate employment history, verifiable sources of income, good credit or credible collateral.  
• The land must be in USDA zone districts and the borrower must not have an outstanding USDA loan on another property already.

Are there other requirements?

All applicants are required to go through credit counseling prior to obtaining a USDA loan. The applicant will need to attend a USDA-approved housing counselor training session with an accredited housing organization before it can be accepted for processing by Trinity Oaks Mortgage or any other local lender. The goal of credit counseling is to help reduce risk and give homeowners greater insight into their borrowing power.

Are you interested in applying for a USDA Home Loan?

Trinity Oaks Mortgage, one of the area’s leading mortgage lenders has vast experience in dealing with USDA Rural Development loans in Texas. We’re available to answer any questions, help determine if you are eligible and guide you through the home loan process.  

APPLY NOW

If you or someone you know is interested in securing USDA financing, let’s talk! Submit the below form and we will connect you with one of our expert Loan Advisors near you.  

The post A Guide to USDA Home Loans appeared first on Trinity Oaks Mortgage.