Finding the Best FHA Home Loans

The Best FHA Home Loans

For many, finding the best FHA home loans should not be a problem. Although there are a number of different kinds of FHA home loans, on this page we’ll talk about just 2 of them. For most first time home buyers this will suffice. The first will be the FHA 203(b) home loan. Now if you’re into technical stuff and want some good bedtime reading go ahead and get a copy of the Department of Housing and Urban Developments (HUD) handbook 4155.1 REV.4.

It’ll surely bore you to death but at least you will see where I’m coming from when sharing this information with you.

The reason we’ll talk about the 203(b) is because very likely, this is the best FHA home loan for the first time home buyer and used most often.

THE BEST FHA HOME LOANS 203(b) EXPLAINED

So what does 203(b) stand for? That is the section number under which the underwriting guidelines can be found in the National Housing Act.

The main thing for you, the first time home buyer to know is this type of loan program is a great way to begin homeownership.

The US Government has this loan program in place to help people become homeowners building stronger communities and to help the US economy. Think about that for just a moment. The more homeowners in a neighborhood, the better a community becomes. Homeowners have pride of ownership and take good care of their properties.

To qualify for this type of FHA loan is really quite simple. There are certain credit requirements, income, FHA mortgage insurance and other things to consider. For the most part this is a great way for you to get started.

Many people may try to steer you away from this kind of loan product. Do your homework. Take it from me; this is not nearly as hard as people make it out to be. It was this type of loan I used for my first home.

For many Loan Officers, they just do not know how it works or resist the extra effort involved helping you to become qualified. It is not that hard to become qualified!

If you meet with resistance when asking for information on FHA 203(b) home loans, move on. Find someone you trust and that has knowledge of the product. If you have questions about the product or the qualifications, don't hesitate to contact me.

There is much more to this loan product. If you want to learn more about how this can help you visit the HUD website or request my FREE 14pg Guide '10 Critical Steps for First Time Home Buyers".

MY FIRST HOME LOAN WAS A 203(b)

If you recall when I was telling you my experience on the home page of this website, my first home was purchased under a FHA 203(b) home loan. Now I didn’t know that at the time because all I was looking at is the $570.00 down payment.

FHA 203(b) loans require a 3% down payment. In my case, the purchase price was $19,000.00 so my 3% down payment equaled $570.00. So all I could think about was I was going to become a homeowner for a small amount of money. In fact it was equal to about 1 months rent for me. Now this was back in 1978 so homes are a little costlier now of course.

THE BEST FHA HOME LOANS 203(k) EXPLAINED

The other FHA loan is called the 203(k). This loan product is used far less often since it requires more for you to qualify for it.

The way this loan product works is it allows you to both buy and repair a home with borrowed money. Again, the same 3% down payment requirement applies.

This is different because you can buy a house in need of repairs. The repairs must be at least $5,000.00. Like the 203(b) home loan you must plan to live in the property.

A HUD licensed Consultant will meet with you at the property to complete a Work Write-Up of the repairs to be made on the house.

There will be mandatory repairs which will bring the home up to HUD’s minimum standards. Also there’ll be some recommended repairs the borrower would like.

You can act as your own general contractor, take estimates and use these to determine costs or you can hire the work out to a licensed professional.

The HUD licensed Consultant will need to be paid for this service by you up front before closing on your loan. This fee is normally somewhere from $400-$1,000 dollars.

The repairs must begin within 30 days of closing on the loan and should not have any delays longer than 30 days.

The money for repairs is held in escrow until the work is completed. You can take 5 draws during the construction process.

The real downside to this kind of a loan is if you plan to do your own work, you must have sufficient funds to make repairs before taking a draw. In other words, you get reimbursed for completed work and materials.

So then really, one of the best FHA home loans is the 203(b) talked about just above. If using the 203(k) loan, most people use the contractor since he uses his own money to make the repairs and takes draws as needed.

Like the 203(b) loan, there’s more to this loan product as well. To find out more on the best FHA home loans visit the HUD website or request my FREE 14pg Guide “10 Critical Steps for First Time Home Buyers”. Just click on this link: The Best FHA Home Loans

So now, to move forward on the the best FHA home loans and all the different facets to them, follow the links below starting with the first one.

If you read over these pages one at a time, soon you'll get the idea of how to find the best FHA home loans for you.

FHA Loans