The Federal Housing Administration‘s (FHA) mission is to insure affordable mortgage loans to home buyers looking to purchase a 1-4 family home as a primary residence. They have been invaluable in helping plug the hole created when private insurance companies and conventional mortgages guidelines tightened after the housing crisis. While attractive to the first time buyer, being a first time buyer is not a requirement to obtain an FHA insured mortgage. The home must be the borrower’s primary residence, and there are maximum loan limits, which are set depending on the County in which the home is located. For example, the maximum mortgage limit for a single family home in Ulster County is currently $406,250.

An FHA loan is a popular mortgage option due to flexible guidelines that allow for down payments as low as 3.5%. The down payment can be a gift from a family member or a grant from a not-for-profit housing agency. FHA also allows borrowers to negotiate up to a 6% seller concession toward a purchaser’s closing costs and prepaid items. The net result is that FHA loans allow a borrower to buy a home with less money “out of pocket” – very important to today’s buyers!

The FHA has had a reputation for having very stringent appraisal guidelines. While the FHA certainly wants the house to be in good condition, they have relaxed some of the appraisal requirements to fall more in line with conventional loan standards. The FHA still does have some hot-button items. For example, wells and septic fields

should be at least 100 feet apart, although some exceptions apply. They also require certain safety issues to be corrected prior to closing. For example, hand rails near steps that are missing may need to be installed, and any peeling paint that might contain lead will need to be scraped and repainted.

Low down payments, generous loan limits, and flexible credit underwriting has made FHA mortgages an affordable alternative for many of today’s home buyers.

The key to a smooth FHA mortgage process is to work with a loan officer who is experienced in all aspects of the program. A knowledgeable loan officer will walk prospective home buyers through the FHA mortgage process and help determine if they qualify for this popular mortgage program.