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FHA Loan for Prior Home Owner

by Jack
(San Rafael, CA)

Owned a home before, for many years. Got into financial problems, and had to sell in 2009, to avoid foreclosure. Have paid mortgage collections on my record, from that year.

The mortgages were paid in full, not settled. Had some unpaid credit cards collections also, but all were settled in 2009 except one, which I am working on now.

Current credit score is about 650-655.

My income for the last 2 years has been from social security (slightly over $2000/mo.) plus some self-employment income (about $600/mo.) My wife also has income.

Is there a FHA or other government loan program for a second time home buyer like me, so I can get a 10% or lower down payment loan?

Jack

=====ANSWERS=====

Hello Jack and thank you for giving such great details so I can try to give you a good answer.

I did a quick search at HUD.gov to find out what government programs may be available to you.

The fact that you have had steady income for 2 years should be in your favor. The lender will need to verify that income.

The maximum DTI (dept to income) ratio for an FHA loan is 29%. So to figure your house payment you would multiply your gross monthly income by 29%. This figure would be your PITI or principal, interest, taxes and insurance. If I used your figures of $2600 x .29 = $754 would be the most you could afford for a monthly house payment.

Your credit score should work since the minimum of 580 is required to get the maximum LTV (loan to value) amount of 96.5%. So your down payment would be 3.5%.

The open collection you have may be an issue. If the balance is over $1000 you will need to prove that you have been making payments on that collection on time and in an orderly fashion.

The loan program you may qualify for is the FHA 203b loan. For more information on this loan program Click Here for more info on FHA home loans to learn more.

What I discovered in regards to your county, you can buy a 1-4 family home. The maximum mortgage amount for a single family is $729,750. It goes up from there for multi-family.

So to summarize, you might just find out you can buy a home once again. You may not be a first time home buyer but it appears you may qualify as if you were.

I hope this answers your questions. Please feel free to like us in Facebook, Google+ or give us a shout out in Twitter. This helps me keep this website free for others like yourself.

Cheers,

Jeff

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HUD Loan

by Craig
(Colorado)

My client wants to bid on a HUD home, their is an insured escrow on it. He wants to pay for the escrow out of pocket, not roll it into the loan, which loan on sect 4 of the contract would apply, 203b, 203b escrow, 203k?

Thanks Craig

=====ANSWER=====

Hello Craig;

Thanks for stopping by my site and asking a question.

If your customer is not putting down at least 20%, then he cannot get around the escrow requirement by FHA. In fact this is the down payment requirements for any lenders to avoid escrow.

The lender will not waive escrow until the LTV is 80% or below. Otherwise they will have to setup escrow for taxes and insurance. That is the only way the lender can protect themselves with an LTV above the 80%.

Most FHA buyers will put down 3.5% so they end up with a 96.5% LTV.

Chances are you are doing an FHA 203b loan.

Hopefully this helps.

Regards,

Jeff Ragan

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