What is an FHA Loan?
FHA vs. Conventional Financing -
Find out why more and more people are
turning back to FHA!
Most applicants are inundated with a variety of terms describing mortgages that are available on the market. The most popular include, Conforming, FHA, and VA. FHA was created by the Federal Government to provide affordable housing financing for qualified borrowers. FHA insures 100% of the loan, eliminating the lender's risk. The borrower pays an upfront insurance premium which is approximately 1.75% of the loan amount. This money can be, and almost always is financed directly in the loan amount. The borrower also pays a monthly premium of .55% of the loan amount divided by 12 months. FHA requires down payment of 3.50%. This money can be a gift. No reserves are required. Closing costs can be financed in the loan amount. IT SOUNDS COMPLICATED, but it really is very simple to understand. Just call us at (651) 552-3681 and we'll explain it to you. Borrowers must provide proof of sufficient income to show ability to pay the mortgage, and have at least OK credit. FHA guidelines are a bit more relaxed, but it is NOT a bad credit loan! All applicants on the loan MUST HAVE a minimum middle credit score of 620 in all but the most extreme cases to get an FHA loan. FHA interest rates are extremely competitive with conventional Fannie Mae and Freddie Mac rates. Down payment requirements can be low. In contrast to conventional mortgage products, which frequently require down payments of 10 percent or more of the purchase price of the home, single-family mortgages insured by FHA make it possible to reduce down payments to as little as 3.50% percent. Many closing costs can be financed. With most conventional loans, the borrower must pay, at the time of purchase, closing costs (the many fees and charges associated with buying a home) equivalent to 2-3 percent of the price of the home. This program allows the borrower to finance many of these charges, thus reducing the up-front cost of buying a home. FHA mortgage insurance is not free: borrowers pay an up-front insurance premium (which may be financed) at the time of purchase, as well as monthly premiums that are not financed, but instead are added to the regular mortgage payment. Some fees are limited. FHA rules impose limits on some of the fees that mortgage companies may charge in making a loan. For example, the loan origination fee charged by the mortgage company for the administrative cost of processing the loan may not exceed one percent of the amount of the mortgage. HUD sets limits on the loan amount. To make sure that its programs serve low- and moderate-income people, FHA sets limits on the dollar value of the mortgage loan. FHA uses a complicated formula to determine the loan limit in EACH COUNTY across the country. Click here to see the county limit you are interested in. Fannie Mae & Freddie Mac loans are conventional loans made at the risk of the lender without benefit of any government guarantee or government insurance. A conventional loan with an LTV (loan to value ratio) of greater than 80% requires primary mortgage insurance, which can be paid monthly. The borrower must (usually) have 5% of his/her own funds for the down payment and 2 months reserves on deposit. 100% conventional zero down financing is becoming extremely hard to find and qualify to receive. Because of this, FHA has come back with a vengeance! Requirements of a conventional loan applicant include excellent credit, job stability with sufficient income, a sizable down payment, and low debt to income ratios. Borrowers who meet Fannie Mae or Freddie Mac conventional guidelines are rewarded with an interest rate only slightly lower than an FHA interest rate. FHA Mortgage Insurance. Mortgage insurance is required under all programs where the borrower does not put at least 20% down payment. Under the OLD FHA rules, mortgage insurance was required for the entire loan period. Conventional loans are able to eliminate mortgage insurance when you reach 80% loan-to-value (20% equity). A BIG advantage over FHA. NOT ANYMORE! FHA mortgage insurance is eliminated at 78% loan-to-value (22% equity), just like conventional loans!
The FHA
Streamline Refinance
VA Mortgage Loans (Zero
Down)
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FHA
minimum down payment changed to 3.50%
down effective January 1, 2009|
Finding the right home starts with a great search tool
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With fixed rate loans, you’ll always know what to expect with a predictable, non-variable mortgage payment. Your monthly principal and interest payments never change because your interest rate stays the same for the duration of the loan. While fixed rate loans generally have higher interest rates than adjustable rate loans, they do offer predictability that many homebuyers, especially those on a fixed or modestly increasing income, find comforting. Fixed rate loans also offer the option to refinance if interest rates decrease and may be the right loan for you if you plan to be in your home for a while.
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Adjustable Rate Mortgages
Adjustable Rate Mortgages (ARMs) are loans that generally provide an initial rate that is lower than the standard fixed rate loan. After an initial fixed rate period (1, 3 or 5 years), the interest rate can adjust annually based on the movement of a specific index plus a margin not to exceed 2 percent every year and 6 percent over the life of the loan. Your monthly payment changes as the rate changes annually. To the borrower’s advantage, the initial payment of an ARM is usually low, permitting the purchase of a home that otherwise may be unaffordable with a fixed rate mortgage, although there is a risk of higher payments later. An ARM may be right for you if you need the lowest possible initial payments or if you don’t plan to keep your home for more than a few years. Jumbo loans are available at adjustable rates.
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Mortgage Credit Certificates
A Mortgage Credit Certificate or MCC is a certificate awarded by your local government agency authorizing the home loan borrower to take certain federal income tax credits. The credits awarded help to free up funds and make the monthly home loan payments more affordable for the homeowner. First time home buyers are typically the candidates eligible for an MCC but in special cases that you may discuss with your mortgage consultant, this requirement may be waived. Income and purchase price requirements also vary state to state and should be covered in conversations with your home loan representative.
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Community Bond Down Payment Assistance Programs
Many City, County, State, and community homebuyer programs reduce the down payment and out-of-pocket costs the borrower must pay. The assistance can be a full gift, a partial grant, a repayable grant. These types of programs usually are added on top of a traditional FHA home loan to cover down payment and / or closing costs. These programs often requires the home buyer to take a class on home ownership in their state. Upon completion of the class, the homebuyer will receive a certificate that reduces the cash requirement and expands the qualification ratios. Community homebuyer programs have been making it possible for many people to have the opportunity to buy a home who often didn't have the cash to buy a home. Some examples are: City Living, Dakota County First-time buyer, etc.
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Dakota County First Time Home
Buyer Loan Programs
Whether you are buying an existing home or building a new one - a Dakota County First Time Home buyer Loan may help you make homeownership a reality. Homebuyers accessing a First Time Homebuyer Loan may qualify for a below market interest rate and may also be eligible for Down payment and Closing Cost Assistance.
2010 Dakota County First Time Home Buyer money NOW AVAILABLE. Apply online and be ready to go!Up to $10,000 also available in down payment and closing cost assistance to those who qualify
Most Minnesota city, and county mortgage and down payment assistance funds are limited, and on a first-come, first-serve basis. Contact us as early as possible in the home buying process to be sure you are qualified.
If you have questions about the home buying process, call 651-552-3681, or APPLY online 24-hours a day via our secure application. There are no costs or obligations.
WE ALSO OFFER THE DAKOTA COUNTY SILVERLINING PROGRAM
Dakota County Basic Program Guidelines & Details
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Loans are 30-year fixed rate mortgages and can be FHA, VA insured mortgages.
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Income Limits are $83,900 for a one or two person household and $92,290 for households with three or more persons.
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Maximum Purchase Price = $276,683
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Eligible properties include single family homes, town homes and condominiums located in Dakota County, Minnesota.
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Buyers must be a first time homebuyer or someone who has not owned their primary residence in the last three years.
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Traditional down payment and closing cost requirements apply.
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Home buyers must put a minimum of $750 down
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Buyers must occupy the home as their primary residence after purchase.
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First Time homebuyer funds are reserved on a first-come, first-serve basis
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Buyers MUST attend Home Stretch Home Buyer Education Classes
To apply for a Dakota County First Time Homebuyer Loan, contact a participating mortgage lender like us.
.
The lender will review your
income and credit history to
determine whether or not you
will qualify for the loan.
It is important that you know not all lenders are able to do MHFA, City, County, Bond loans, FHA or VA loans. We are proud to be a provider of many of these loans, including the Dakota County First-time home buyer down payment assistance program.
Knowing your full exact situation will help us determine if a government assistance loan programs are right for you. Being pre-approved also gives you ultimate buying power and the upper hand in negotiating.
Ready?
In addition to mortgage financing, eligible buyers using a Dakota County First Time Home buyer Loan can access funds through the CDA's Down payment and Closing Cost Assistance Program to help with the initial costs of owning a home. The CDA offers two types of down payment and closing cost assistance. Each may be used individually or in combination with each other.
In addition to grant assistance, income eligible buyers may access down payment and closing cost assistance loans of up to $10,000. These loans are zero interest, deferred loans that are paid back at the end of the 30-year mortgage term or when the home is sold or refinanced. Eligibility is based on the buyer's gross household income adjusted for family size and the successful completion of a Housing Quality Standards Inspection.
Down
Payment & Closing Cost Loans
Income Limits
DPA Assistance Amounts
There are three levels of assistance, based on household income:
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Level 1. Households earning at or below 50% of median income are eligible for 10% of the base first mortgage amount, up to $10,000.
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Level 2. Households earning 51-80% of median income are eligible for 5% of the base first mortgage amount, up to $7,500.
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Level 3. Households earning more than 80% of median income up to the program limits are eligible for 2.5% of the base first mortgage amount.
Household Income Limits (These limits are determined by HUD and subject to change in March 2010).
The “household” income includes all persons living in the property, regardless of family relation or whether they are a party to the first mortgage. Income from all members of the household age 18 years and older must be included when determining which level of assistance applies to the household|
1 person |
2 person |
3 person |
4 person |
5 person |
6 person |
7 person |
8+ person |
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Level 1 |
$29,350 |
$33,550 |
$37,750 |
$41,950 |
$45,400 |
$48,650 |
$52,000 |
$55,350 |
|
Level 2 |
$44,800 |
$51,200 |
$57,600 |
$64,000 |
$69,100 |
$74,250 |
$79,350 |
$84,500 |
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Level 3 |
$89,300 |
$89,300 |
$92,290 |
$92,290 |
$92,290 |
$92,290 |
$92,290 |
$92,290 |
Down payment and closing cost assistance funds are reserved on a first-come, first-serve basis. At the time you apply for a First Time Homebuyer Loan through a participating mortgage lender, you will also apply for down payment assistance.
Home Stretch® Homebuyer Education Program
The Home Stretch Program teaches potential homebuyers about the entire home buying process and the responsibilities of homeownership. Topics covered in these monthly seminars include: Budgeting and Credit Issues, Financing and Qualifying for a Home, Shopping for a Home, The Purchase Process, Closing on a Home and Life as a Homeowner.
Home buyer education is taught by professionals in the home buying field. The classes are typically held from 6 to 9 p.m. each night and you must attend all three nights to complete the class. The cost to attend the class is varies depending on exact class taken, but is very small ($10- $20 per household).
Pre-registration is required. Call 651-552-3681
Pre-Purchase Counseling Program
The CDA's Pre-Purchase
Counseling Program provides free
individual counseling to Dakota
County homebuyers and can be
accessed anytime during the home
buying process, whether you are
buying a home now or in the
future.
This program assists homebuyers in creating a plan to become successful homeowners. The plan may include: credit repair, creating a household budget in order to save for a down payment on a home, identifying mortgage loan products that best meet the household's needs and/or examining and answering questions about loan documents.
Eligible Properties include:Existing single family homes, townhomes, FHA approved condominiums or duplexes in Dakota County (Duplexes can be no more than 5% of the program. Duplexes are limited to existing homes that are at
least 5 years old.)
New construction
is eligible in Apple Valley,
Burnsville, Eagan, Empire
Township, Farmington, Hastings,
Inver Grove Heights, Lakeville,
Mendota Heights, Rosemount,
South St. Paul, Sunfish Lake and
West
St. Paul.
Homes are considered new if never previously occupied.
If you have questions about the home buying process, call 651-552-3681, or
online 24-hours a day via our
secure application. There are no
costs or obligations
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Finding the right home starts with a great search tool
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City Living Program in St Paul and Minneapolis, MN
River walks, people, fine dining and concerts. And
that’s just the beginning. From condos and lofts in downtown to charming homes
in historic residential neighborhoods, the Twin Cities area has much in the way
of housing options that allow you to enjoy all that major cities have to offer.
With City Living’s loan programs, the reality of urban living and home ownership
is not far away.
Homebuyers accessing this First Time Homebuyer Loan may qualify for a below market interest rate may also be eligible for Down payment and Closing Cost Assistance. As a borrower, you can choose from two market mortgage interest rates; one rate comes with a Down Payment Assistance Grant (DPA) of either 2% of your new homes purchase price, while the other rate is without the grant (Non-DPA). This program is made available by the cities of Saint Paul and Minneapolis, and is available for homes within the Minneapolis and St Paul City limits.
General Program Information and Qualifications- You must live in the home.
- Property must be single family home, or duplex in Saint Paul or Minneapolis city limits.
- Income and purchase price limits apply.
- Home Buyer counseling class is required. (call 651-552-3681 to register)
- First Time homebuyer funds are reserved on a first-come, first-serve basis
First Time Home Buyer money NOW AVAILABLE. Apply online and be ready to go!
| Homebuyer Education Workshops Homebuyer Education Workshops are offered at a low cost through the Home Ownership Center. The workshops provide first-time homebuyers comprehensive information to prepare them for home ownership. The Home Stretch Program teaches potential homebuyers about the entire home buying process and the responsibilities of homeownership. Topics covered in these monthly seminars include: Budgeting and Credit Issues, Financing and Qualifying for a Home, Shopping for a Home, The Purchase Process, Closing on a Home and Life as a Homeowner. Home buyer education is taught by professionals in the home buying field. Home Stretch ® is a nine-hour course that is held monthly. Either over three days from 6 to 9 p.m. each night, or an all day Saturday class. Participants must attend all three nights or the single all day session full day to complete the course. A small cost of $15-$25 per household may be required. The workshops are offered in English, Spanish, Hmong and Cambodian. Bilingual counselors or interpreters are also available for other languages. Call 651-552-3681 to register. |
Most
Minnesota city, and county mortgage and down payment assistance funds are
limited, and on a first-come, first-serve basis, including the City Living
Program. Contact us as early as
possible in the home buying process to be sure you are qualified.
If you have questions about the home buying
process, call 651-552-3681, or APPLY online 24-hours a day via our secure
application. There are no costs or obligations.
To apply for a City Living Loan contact a participating mortgage lender like us. The lender will review your income and credit history to determine whether or not you will qualify for the loan. It is important that you know not all lenders are able to offer the City Living Program. We are proud to be a provider of many of these loans.
Knowing your full exact situation will help us determine if a government assistance loan programs are right for you. Being pre-approved also gives you ultimate buying power and the upper hand in negotiating.
Ready?
Down Payment & Closing Cost Loans Income Limits
Household Income Limits (These limits are determined by HUD and subject to change in March 2010).
The “household” income includes all persons living in the property, regardless of family relation or whether they are a party to the first mortgage. Income from all members of the household age 18 years and older must be included when determining which level of assistance applies to the householdIf you have questions about the home buying process, call 651-552-3681, or
online 24-hours a day via our secure application. There are no costs or
obligations.
Buyers must live in the property they purchase as their principal residence. Buyers must occupy the property purchased within 60 days of closing The past three years federal income tax returns are required The program requires a minimum credit score of 620 (the mid score must be 620 or above). HOUSEHOLD INCOME LIMITS: Include income of borrower(s) and spouse(s) and any person who will live in the household who is 18 years of age or older. MAXIMUM HOUSEHOLD INCOME LIMITS: Non-Targeted Areas: 1 or 2 person households: $83,900 - 3 or more person households: $92,290. Targeted Areas: 1 or 2 person households: $92,290, 3 or more person households: $92,290. 50% of the funds must be held for persons or families with incomes not greater than $83,061 for the first six months of the Origination Period. Eligible properties include 1-4 unit, existing single family homes, townhomes, FHA approved condominiums in Minneapolis/Saint Paul. Existing 2-4 units dwellings must be at least 5 years old. Borrowers of multiple unit dwellings must occupy one of the units.) Homes are considered new if never previously occupied. Cosigners are permitted for FHA/VA loans under very specific conditions. The co-signor / guarantor is acting in such capacity solely for purposes of providing additional security for the Mortgage Loan. The co-signor / guarantor has no Present Ownership Interest or other financial interest in the Residence. The co-signor /guarantor has no intention to and will not occupy the Residence as a permanent residence, and the co-signor / guarantor executes the Affidavit of Co-signor or Guarantor. A cosigner’s income is not considered for bond program purposes, tax returns are not required and cosigners do not sign any bond documents. The 2.00% Down payment and closing cost assistance available with the 4.99% first mortgage is secured by a 0%, deferred second that is forgiven on the 7th anniversary of the loan. Prior to the seventh anniversary, the loan must be repaid when the primary mortgage is paid off, the home is no longer the primary residence, or when the home is sold or refinanced. |
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Contact our home loan expert at (651) 552-3681 to help you develop a financing plan customized to fit your individual situation.
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Joe Metzler,
MLO,
MMS,
UMB |
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Email
Us
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