Is an FHA mortgage right for me?

In 2015 the obama administration realized they needed to do something to help more consumers become home buyers. In the past FHA was the program promoted for first time home buyers do to their minimal out of pocket expense for the down payment being at 3.5%. The other good feature is being able to get up to 6% of the sales price as a sellers concession toward the transaction to help with closing costs. The downside for the past year or so has been the increased mortgage insurance premiums that were put into place in April 2013. This results in a higher monthly payment which for many put them over the allowable ratio needed to qualify.

It was decided that in conjunction with GSE Fannie mae and Freddie mac coming back out their 3% down program that FHA needed to scale the MIP back to help more consumers qualify for homes. With the reduction from 1.35% down to .85% this should take that monthly charge down for the MIP(mortgage insurance premium)  and bring down the debt to income ratio to help more consumers qualify. The administration estimates this could save consumers roughly $900 a year.

One downside that still remains is in the past once you had 20% equity in your home you could request the MIP be removed. FHA MIP is now for the life of the loan. The only way to get relief from the MIP is to refinance out into another program.

FHA does have some pro's being the minimal down payment and sellers concession you can receive. They also are willing to go a little lower than your conventional products with the credit scores. But it does have some cons being the price of the MIP which has been reduced but is still usually higher than conventional products and having to have it for the life of the loan.

Everybody's situation is different and thats why there is a variety of different products. No matter your situation I am happy to discuss products with you to help find the one you think best fits your needs.  

Justin M. Stottlar

Senior Mortgage Consultant

Monument Bank

378 North Main St.

Doylestown, Pa 18901

c:267.261.3775

f:  267.224.4469

e: jstottlar@monumentbankpa.com

NMLS ID # 954839

"Service Beyond Expectations