The U.S. Department of Housing and Urban Development (HUD) oversees F.H.A. loans (Federal Housing Administration).
Here are the features:
Requires only 3.5% down
The seller can pay up to 6% of the purchase price towards buyers’ closing costs.
The maximum loan amount for much of our region is about $274,850.
Mortgage insurance is required: a lump sum is rolled into the loan and it is also charged on a monthly basis, .85% of the loan amount divided by 12 is the monthly amount. Mortgage insurance does not protect the borrower in anyway. It protects the lender in case of default. Mortgage insurance is required on F.H.A. loans no matter how large the down payment.
Credit scores should be around 580.
Fixed and adjustable rate loans are available, 30 year and 15 year amortizations.
These loans are assumable and there are no pre-payment penalties.
There are no income limits like there are for U.S.D.A. loans.