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District of Columbia FHA Loans

What are FHA Loans?
FHA stands for Federal Housing Authority. A Federal Housing Authority loan provides low-cost insured home mortgage loans that suit a variety of purchasing options. Whether you're buying a home or want or refinance your mortgage, FHA loans might be right for you. If you're unsure about your credit rating, or have concerns about a down payment, FHA loans can give you piece of mind with super low closing costs and flexible payment options.

What factors determine if I am eligible for an FHA Loan in the District of Columbia?
To be eligible for an FHA Mortgage, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income. Your credit background will be fairly considered. You must be able to make a down payment, cover closing costs and have enough income to pay your monthly debt.

What is the maximum amount that I can borrow?
The maximum amount for an FHA Mortgage is determined by:

Maximum Loan Amount in the District of Columbia: The maximum loan amount allowed for FHA mortgages varies from county to county in the District of Columbia. The highest maximum FHA mortgage right now in the District of Columbia is $729,750. To see what the limit is in the county in which you're interested, visit the following site https://entp.hud.gov/idapp/html/hicostlook.cfm. This site lists U.S. territories as well as states.

Maximum financing: In the District of Columbia, the maximum FHA financing will be either 98.75% or 97.75% of the appraised value of the home or its selling price, whichever is lower.

How much money will I need for the down payment and closing costs?
District of Columbia FHA loans require the home buyer to invest at least 3% of the sales price in cash for the down payment and closing costs. If the sales price is $100,000 for example, the home buyer must invest at least $3,000. However, the home buyer can use gifts from family, funds from local, state or government agencies, or other sources for the down payment.

What property types are allowed for FHA Loans in the District of Columbia?
While FHA Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and 1-4 family residences, in which the borrower intends to occupy one part of the multi-unit residence.

More information on FHA Mortgages

What types of refinance programs does FHA offer in the District of Columbia?
There are three main types of FHA Refinance loans available in the District of Columbia.

FHASecure Refinance
The FHA Secure Refinance is for borrowers who currently have a conventional fixed rate or ARM mortgage and wish to refinance into an FHA Mortgage. The borrower may be delinquent on the current adjustable rate mortgage and still qualify.

Cash-Out Refinance
An FHA Cash Out Refinance is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.

Streamline Refinance
The FHA Streamline Refinance is designed to lower the interest rate on a current FHA mortgage or convert a current FHA adjustable rate mortgage into a fixed rate. An FHA Streamline Refinance can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no appraisal, no qualifying debt ratios and no income verification.

How much can I refinance in the District of Columbia?
The maximum amount for an FHA loan is determined by

Maximum Loan Amount in the District of Columbia
The maximum loan amount allowed for FHA refinance Mortgages varies from county to county in the District of Columbia. The highest maximum FHA refinance loan amount right now in the District of Columbia is $729,750. To see what the limit is in the county in which you're interested, visit the following site https://entp.hud.gov/idapp/html/hicostlook.cfm. This site lists U.S. territories as well as states.

Maximum financing: In the District of Columbia, the maximum financing for an FHA Secure Refinance (No Cash-Out) or FHA Streamline Refinance(No Cash-Out) will be either 98.75% or 97.75% of the appraised value of the home or its selling price, whichever is lower. The maximum financing for an FHA Cash-Out Refinance in the District of Columbia is 95%.

What factors determine if I am eligible for an FHA Refinance Loan?
To be eligible for an FHA refinance loan in the District of Columbia, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income. Your credit background will be fairly considered. You must be able to make a down payment, cover closing costs and have enough income to pay your monthly debt.

What are the advantages of FHA Loans versus Conventional Loans?
FHA-insured loans offer many benefits and protections that you won't find in other loans including:

. FHA Loans are Credit Flexible
FHA loans are not credit score driven. Instead, they are written in a way that provides the borrower the benefit of the doubt that there had been, at some point in their past, circumstances beyond their control, and as long as the borrower has recovered from those circumstances in a reasonable manner, they're generally going to be credit-eligible for an FHA loan.

. FHA Loans have Great Interest Rates and Low Monthly Mortgage Insurance
A distinct advantage of an FHA insured loan, as compared to a conforming loan, is great interest rates and lower monthly mortgage insurance (MI). Depending on the program, standard FHA loan interest rates are usually better than a conforming 30-Year Fixed loan.

. FHA Loans Require a Less Home Equity or Cash
FHA refinance Loans have as low as a 3% cash or home equity requirement for refinance and the money can come from a family member, employer or charitable organization as a gift.

. FHA Offers More Protection to Keep Your Home
The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, the FHA has many options to help you keep you in your home and avoid foreclosure.

Streamlined Refinance and Assumable Loans
One of the most important advantages of an FHA loan is the ability for the loan to be assumed. This gives the buyer a significant advantage in a high interest rate market. FHA loans are eligible for streamline refinance, a program HUD offers that allows the borrower to easily refinance the loan to reduce their interest rate and lower their monthly payment.

 

More information on FHA Refinance

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 Why an choose FHA Mortgage?

  • FHA Mortgages require a Low 3% down payment.
  • Non-occupant, co-borrower are permitted for qualifying for an FHA Mortgage.
  • FHA Mortgages use Expanded qualifying ratios.
  • There are no prepayment penalties for an FHA Mortgage.
  • An FHA Mortgage is fully assumable.
  • FHA Mortgages have lower MI premiums.
  • An FHA Mortgage is eligible for non-credit qualifying, streamline refinance.
  • An FHA Mortgage is available all areas of the country, provided a market exists for the property and the home meets HUD's minimum property standards.
  • An FHA Mortgage may be used to purchase or refinance a new or existing one to four family home in urban and rural areas, including manufactured homes on permanent foundations.
  • FHA Mortgages are offered at terms of 15 or 30 years.

 FHA Refinance Programs

FHASecure
The FHASecure program is for borrowers who want to refinance their current fixed rate mortgage or ARM loan into a stable, FHA insured mortgage. You can be delinquent on your current ARM mortgage and still qualify for an FHA Secure mortgage loan. You may even be allowed to include the amount you are behind on your current ARM in your new loan.

Cash-Out Refinance
An FHA Cash Out Refinance is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.

FHA Streamline Refinance
The FHA Streamline Refinance is designed to lower the interest rate on a current FHA mortgage or convert a current FHA adjustable rate mortgage into a fixed rate. An FHA Streamline Refinance can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no credit check, no appraisal, no qualifying debt ratios and no income verification.


 FHA Refinance Questions & Answers

What are the guidelines for an FHA Refinance?
If the borrower wishes to take cash out of the property, then the maximum financing amount is either 95% or 85% of the appraised value, depending on the borrowers qualifications. If the borrower does not take cash out then the maximum financing will be either 98.75% or 97.75% of the appraised value of the home or the amount you are refinancing plus closing costs, whichever is lower.

Why should I consider refinancing into a FHA-insured mortgage?
FHA refinance loans do not come with prepayment penalties, have no teaser rates nor balloon payments. They are offered at market rate with terms up to 30 years and are fully amortized, meaning that you pay towards principal and interest every month.

What if I have a prepayment penalty and other refinancing costs and there isn’t enough equity in my home to refinance?
If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new FHA mortgage, then you should ask your lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. Offering either of these options is at the discretion of the lender.

Does it matter that the value of my home is now less than what I still owe?
Not to FHA, but the mortgage lender considering the refinance would have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home’s value.

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