The primary goal of the Federal Housing Administration (FHA) is to improve the housing market by insuring home loans. By backing home loans made by approved lenders, both the buyer and lender benefit. Homebuyers receive great rates and are able to qualify with less than ideal credit while lenders are protected from borrower default. A variety of loan programs are offered by the FHA including options for purchases, refinances, financing special renovation projects, and even reverse mortgages. Canyon Mortgage Corp offers great rates on FHA loans throughout Lake Success, New Hyde Park, East Rockaway, and Floral Park.
Low down payment and relaxed credit score requirements make FHA loans very popular among first-time homebuyers. Buyers can potentially qualify for an FHA loan with a credit score of 580 and a down payment of only 3.5%. The FHA even allows down payments to be gifted from family members if the buyer does not have the cash on hand. Loan limits vary by county and can range from $271,000 up to $636,500 in high-cost areas.
The FHA offers both cash-out refinance and streamline refinance options for current FHA loan holders. To help protect borrowers, streamline refinancing is only available if the borrower will save money through the refinance. The FHA 203k loan is available to borrowers who want to take on a rehabilitation project. This unique type of home loan allows a borrower to combine the purchase of a home and the cost of renovations and repairs into a single mortgage.
No matter what type of loan you need, certain requirements must be met for all New York FHA loans.
Common FHA Questions and Answers
- What is the minimum down payment on FHA loans?
-Answer-3.5% is the minimum required down payment
- Are FHA loans for first -time homebuyers only?
– Answer-No. Some people confuse FHA home loan policy with that of a different government backed mortgage program offered by the USDA
which does feature need – based requirements such as household income limits and purchase price caps.
- How do I get pre-approved for a mortgage?
-Answer- Obtaining a pre-approval is virtually a must these days if you are in the house hunt. Mortgage Pre-approval both helps quantify the
amount of house that you can afford and demonstrates to the seller that you are serious about buying. Starting out with a pre-approval means that you begin the entire mortgage process on
the right foot, with a helpful understanding of what you can afford.
- Is there a prepayment penalty?
– Answer- No. On traditional 15 or 30-year mortgages there are no prepayment penalties.
- How long does the process take, from application to closing?
-Answer- For a conventional loan, it could take anywhere from 30-45 days to complete the process from application to closing. The quicker we receive the proper documentation from you the quicker we can close your loan.
New York FHA Loan Requirements
- Credit Score – A minimum credit score of 580 is needed to qualify while still being eligible for the minimum down payment requirement. Buyers with a score between 500 and 579 may still be able to qualify but a down payment of 10% may be needed.
- Debt-to-Income Requirements – Applicants will need a debt-to-income (DTI) ratio of 43% or less. A DTI ratio of up to 50% may be approved in special cases.
- Down Payment – 3.5% of the purchase price is the minimum down payment available. As noted above, a higher down payment may be needed depending on a borrower’s credit score.
- Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.
Every FHA loan requires two mortgage insurance premiums (MIP) to be paid. One is an up-front premium of 1.75% of the purchase price which will automatically be added to your total mortgage amount. The second premium is paid monthly as part of your mortgage payment. This premium will be between .45% and 1.05% of your annual mortgage balance. The exact rate will be based on factors such as the length of your mortgage, the total loan amount, and your loan-to-value (LTV) ratio.
Whether you are looking to purchase your very first home in New York, or are a current homeowner interested in refinancing an FHA loan, at Canyon Mortgage Corp, we offer great rates and terms on all types of FHA loans. Contact us today for more information on FHA loans throughout Lake Success, New Hyde Park, East Rockaway, and Floral Park, or to begin the pre-qualification process!