Asian Journal- The Filipino-American Community Newspaper

FHA loans are becoming popular again! It’s an institution that has been around for a long time, since June 27, 1934. The Department of Housing & Urban Development folded the Federal Housing Administration (FHA) under its umbrella in 1965.

Now, FHA does not make loans or guarantee loans. It insures loans. The insurance removes or minimizes the default risk lenders face when buyers put down less than 20 percent. Without further approval from FHA, its approved lenders are authorized to:

• Take loan applications
• Process loan applications
• Underwrite and close the loan
• For the year 2007 and for 2008 loan limits look like this:

For conventional mortgages (those which may be purchased from local lenders by national organizations such as Fannie Mae and Freddie Mac), the loan limits for owner-occupied properties are:

• One-unit properties: $417,000
• Two-unit properties: $533,850
• Three-unit properties:$645,300
• Four-unit properties: $801,950
• The conventional limit for second loans is $208,500.

If your credit is less than perfect, FHA might be the loan for you. You may qualify for an FHA loan even though you have had financial problems.

FICO scores do not apply.

Bankruptcy. You can obtain an FHA loan two years from the date of your bankruptcy discharge, as long as you’ve maintained good credit since your debts were discharged.

Foreclosure. If you keep your credit in excellent shape since a foreclosure, an FHA loan will be available to you two years from the final date of your foreclosure.

Today’s terms are pretty straightforward. In fact, in many markets the rates and terms are better than those for 80 percent / 20 percent piggyback loans.

There is little or no adjustment to the interest rate for an FHA loan, as the rates vary within .125 percent of a conventional loan.