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Loan Programs

FHA Loans

What is an FHA Loan?

In 1934, the Federal Housing Administration (FHA) was established to improve housing standards and to provide an adequate home financing system with mortgage insurance. Now families that may have otherwise been excluded from the housing market could finally buy their dream home.

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FHA does not make home loans, it insures a loan; should a homebuyer default, the lender is paid from the insurance fund.

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  • Buy a house with as little as 3.5% down.

  • Ideal for the first-time homebuyers unable to make larger down payments.

  • The right mortgage solution for those who may not qualify for a conventional loan.

  • Down payment assistance programs can be added to a FHA Loan for additional down payment and/or closing cost savings.

What can I afford?

Your monthly costs should not exceed 29% of your gross monthly income for a FHA Loan. Total housing costs often lumped together are referred to as PITI.

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P = Principal

I = Interest

T = Taxes

I = Insurance

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Examples: 

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Monthly Income x .29 = Maximum PITI 
$3,000 x .29 = $870 Maximum PITI

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Your total monthly costs, or debt to income (DTI) adding PITI and long-term debt like car loans or credit cards, should not exceed 41% of your gross monthly income.

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Monthly Income x .41 = Maximum Total Monthly Costs 
$3,000 x .41 = $1230 
$1,230 total - $870 PITI = $360 Allowed for Monthly Long Term Debt

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FHA Loan ratios are more lenient than a typical conventional loan.

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