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As of March 2023, the monthly mortgage insurance premium was reduced on HUD (Housing and Urban Development) insured loans, aka FHA (Federal Housing Administration) loans. As conventional loans will now have new (mostly worsening) loan level price adjustments, FHA will again soon appear to be the better option for some home buyers, including those buying for the first time. The following is a list of some of the benefits of this government insured loan type.

FHA Loans:

• Allow for lower credit scores
• Require only 3.5% minimum down payment with no income limit
• Go to higher “debt- to-income“ ratios
• Go through just one underwriter — a Direct Endorsement delegated underwriterDown payment and closing costs can be all gift with an acceptable donor
• Can couple with many down payment assistance program(s) — DPAs do have their own guidelines and often their own, separate underwriting requirements
• Allow up to 6% paid by the seller to closing costs, upfront taxes and insurance if the seller agrees to pay these on the contract negotiation. NOTE: Sellers can no longer pay any portion of the down payment. Seller-paid down payment assistance is a thing of the past

FHA may be the answer to get you or your buyer the keys. For questions regarding the loan cost, how to prepare for purchasing a home or to see if you can get a Step Ahead approval (seen by underwriting and approved in advance), contact your trusted loan officer professional. In today’s fast-paced market, now is the time to see what’s happening and take the mystery out of the mortgage process. 

This article is for general information purposes only and is not intended to provide financial advice. This is not an offer for extension of credit or a commitment to lend. Ruoff Mortgage Company, Inc. is an Indiana corporation licensed by the Indiana Department of Financial Institutions (DFI). For complete licensing information visit: nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/141868. Equal Housing Lender. (Ruoff Mortgage NMLS # 141868) (Gayle Passovoy NMLS # 632959).

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