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FHA loan details for mid-year 2011

In my article yesterday, I reviewed the basic features and benefits of FHA loans.

If you missed the article yesterday, and if you have questions, then please read it, or call me!

Today, lets look at the details…

* the maximum loan amount in metro Atlanta is $346,250 for a one unit property (the rest of Georgia and the the rest of the USA, vary by county and municipality)

* 2 unit properties have a $443,250 limit, 3 unit properties have a $535,800 limit, and 4 unit properties have a $665,850 limit

* Mortgage insurance is required, as follows – up front, 1% of the loan amount is paid by the buyer and can be financed into the loan, then monthly, 1.15% of the loan amount, divided by 12 is included in the monthly payment

* mortgage insurance is reduced with a larger than minimum downpayment – larger than the 3.5% minimum

* FHA loans are for primary residences only

* there is no pre-payment penalty, so if you pay off the loan more quickly than in 15-30 years, FHA will not make you pay them an exorbitant fee – some loans are structured with crushing pre-payment penalties…but not this one

* there are both 15 and 30 year fixed rate loans available

* the downpayment can come from a gift from a relative or a close friend

* the seller can pay up to 6% of the buyer’s closing costs and other incidental costs at closing

* a minimum of a 640 credit score or higher is required

* there are very limited late payments or other derogatory credit items allowed over the twelve months prior to loan application

* the targeted debt ratio  for a buyer is 43% of income or lower

* FHA is an excellent loan program for co-signing situations and you still only have to put 3.5% down, minimum

* the FHA mortgage is qualifying assumable

Did you get all of that?

Get your real estate on! FHA loans are super attractive right now…let me put it to you this way – if I had to do it all over again, and I knew what I know now at age 45, then when I graduated college and got my first decent job that paid well, I would have partnered with one my best friends, got one of our parents to co-sign if needed, bought a $250,000-$400,000 duplex, triplex or quadplex in Midtown Atlanta (circa 1989-1991 there were plenty of those) with an FHA loan and lived in it for a few years.

duplex

By the time I got to be 30 or so, I would probably have moved out, bought a new place with a 20% down conventional loan (or with all the cash I had, maybe I would have bought a few more rental houses) and I would still have that multi-unit building generating $3000-4000 or more in income for me and my partner…every single month…

Think about it…if you are feeling me here, call me – I would love to see you become a real estate magnate by the time you reach 45!

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