Denver Mortgages/ What Is An FHA Loan?

What Is An FHA Loan?

FHA loans are offered by Denver area lenders.  The FHA does not make loans. It insures, in the event of a default, mortgage loans made by approved lending institutions, such as credit unions, mortgage companies or banks.

Advantages of FHA Loans

  • Low down payment - 3.5%
  • Less stringent loan underwriting guidelines - higher debt-to-income ratios allowed.
  • Fully assumable (With qualifying - this will be HUGE in the near future!)
  • 30 yr, 20 yr, 15 yr and ARM programs available

Eligibility Requirements

FHA financing may be by any qualified person, whether a U.S. citizen or not. However, the property must be the occupying borrowers' principal residence. The borrower must also have a social security number.

Denver FHA Mortgage Insurance

Mortgage insurance is required on all FHA loans. The insurance is collected monthly by the lender and paid to FHA, who in turn reimburses lenders in the event of loan defaults.

  • MIP (Mortgage Insurance Premium) is a one-time premium calculated as a percentage of the loan amount.  This fee is usually 100% financed and added to the base loan. Currently, this fee is 1% of the loan amount.

Co-signers in Denver

FHA allows a borrower to use a non-occupying co-signer for purposes of qualifying for the loan. The co-signer's income, assets, liabilities and credit history are included in the determination of credit worthiness. The co-signer must be a blood relative or, for an unrelated individual, there must be documented evidence of a family-type with a long-standing and substantial relationship not arising out of the loan transaction.

Seller's Concessions and Costs

  • The seller can typically contribute up to 6% towards the buyers closing costs and prepaid items.
  • The ONLY "non-allowable" cost to the seller is the Tax Service Fee.  Generally, about $75.  (Many people out there still think these fees are in the hundreds of dollars.  Not any more.)

And Don't Forget...

Gift funds can be used as part of the borrower's down payment, generally under the same terms as the co-signer requirements.This was just a brief synopsis.  If you have further questions, certainly, give me a call!  Brian Burke 303-710-2609




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