Anatomy of the FHA Purchase

In this, the last of these articles over-viewing the opportunities presented by FHA financing, I would like to address the various aspects of purchasing a new home (or at least new to you) through FHA.

As stated previously, purchase money mortgages are available with as little as 3.5% down, and as low as a 580 middle credit score. Also, non-traditional credit references are permitted for those with no credit scores.

In La Porte County, you can purchase up to a maximum base mortgage (after down-payment) of $271,050.00. This roughly equates to a purchase price of $280,000.00. This amount is adequate to cover over 90% of the homes sold in Michigan City and surrounding areas in any given year.

While FHA does have property standards to which we all must adhere, they are primarily based on health and safety concerns. The electrical system must be 100 amp service, there can be no peeling paint or broken windows, handrails must be installed for any staircase in excess of three steps, there must be GFI outlets installed near any sinks, and every home must have adequate smoke detectors to protect the residents.

My general rule is that everyone purchasing a home should invest in a home inspection and spend some time reviewing it and making sure they understand every section of it. FHA also highly recommends home inspections and it is important to understand that FHA and FHA approved lenders do not provide any form of warranty for the condition of the home.

Last, there is a little known program available through FHA for the purchase of insurable HUD repossessed homes. Under this program's guidelines, one of these homes can be purchased by anyone intending to use it as their primary residence with only $100.00 down payment and HUD will even pay up to $2,500.00 towards the buyer's closing costs.

So to wrap this series up, I just want everyone to keep FHA in mind when they are considering any form of mortgage financing. When the situation fits, it's unbeatable.