As an investor, it’s important to know the details of HUD/FHA programs so you can deal effectively with buyers and sellers, particularly in the area of foreclosures. Owner-occupants have first choice on these properties, but when repossessed properties don’t sell, you can pick up some real bargains. So, my advice is to study the basic information I provide in this article, and then gain as much knowledge as possible from the HUD/FHA web sites. That way, when opportunities do arise, you’ll be ready to seize them. Basic Information on FHA The Federal Housing Administration (FHA) is part of the Department of Housing and Urban Development (HUD).

The purpose of the FHA is to insure lenders who make loans. Established in the 1930s, this governmental agency’s aim is to make it easier for people to achieve the American dreamowning a home.

Looking deeper into the purpose of the FHA, you’ll find that its function is to provide mortgage insurance for a person to purchase or refinance a principal residence. In other words, the mortgage loans are funded by private lending institutions (mortgage companies, banks, savings and loan associations, etc.), and those mortgages are then insured by HUD.

This arrangement has several benefits for prospective home owners: Low down payments Low closing costs Easy credit qualifying

FHA has programs for: First-home buyers Seniors Fixer uppers Manufactured housing and mobile homes Energy efficiency, etc.

In this article, I’ll look at only three of these programthe first-time buyer, fixer-upper, and manufactured housing programs. First-Home Buyer Programs These programs have the following eligibility requirements: The borrower must meet standard FHA credit qualifications (judged by the individual’s credit record). The borrower is eligible for approximately 97% financing. The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.

Within this category, the eligible properties are one-to-four sell in cabo unit structures. As of this writing, the highest maximum FHA mortgage is $362,790 while the lowest maximum amount is $200,160. The 203(k) Program for Fixer Uppers This program provides loans to allow you to buy or refinance a property. In the loan, you can also include the cost of making the repairs and improvements. The loans are provided through approved mortgage lenders nationwide. They’re available to buyers wanting to occupy the home.

The down payment requirement for an owner-occupant (or a nonprofit organization or government agency) equals about 3% of the acquisition and repair costs of the property. There are several steps to obtaining such a loan:

The buyer locates a fixer-upper and signs a sales contract after doing a feasibility analysis of the property with a realtor. The contract should state that the buyer is seeking a 203(k) loan. It should also state the contract is contingent on loan approval based on additional required repairs by the FHA or the lender. The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done. The proposal should include a detailed cost estimate on each repair or improvement of the project. The appraisal determines the val

By Haadi