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Federal Housing Administration / Veterans Administration Mortgage Options

FHA/VA mortgages are offered by programs with the federal government to help veterans, those with low incomes or disabilities receive mortgages with low interest rates.  These programs require a little more paperwork, but they can be incredibly helpful if you simply cannot qualify for a conventional mortgage.

FHA Mortgages

The Federal Housing Administration offers low down payment loans to qualified borrowers; those with low incomes or disabilities are eligible.  You must be a first time homebuyer.  If you have owned a home at any point in the past, you will not qualify for this type of loan.  There are FHA refinance programs available, but again you must meet their strict guidelines.

The terms for FHA mortgages vary from state to state.  In California, the FHA will provide loans for a maximum of approximately $300,000 to $400,000 depending on the size of the home and the home's location.  Most states have an average of $200,000, but you will find that amounts can vary.

  • Alaska - $200,000 to $350,000
  • Florida - $200,000 to $400,000
  • Nevada - $200,000 to $360,000
  • New Hampshire - $200,000 to $300,000
  • Pennsylvania - $200,000 to $400,000
  • Vermont - $200,000 to $250,000
  • Washington D.C. - $360,000

To apply for an FHA mortgage, you must have the following information:

  • Balance sheets (Self-employed workers)
  • Credit report
  • Current residence/address where you have lived for the past two years
  • List of assets
  • List of loans and savings accounts
  • Pay stub proving monthly salary
  • Social security numbers
  • Two years of tax returns

There are six types of mortgages offered by the FHA.

  • Adjustable Rate Mortgages:  With an ARM, your loan starts with an extremely low interest rate and then adjusts periodically to reflect the current prime rate plus a certain percentage.
  • Energy Efficiency Mortgages:  If you already own a home but want to make it energy efficient, this type of FHA mortgage can help you achieve your goals. You'll need to contact your local agent ribuyersagent to complete the application process.
  • Fixed Rate Mortgages:  Fixed rate mortgages are typical mortgages where your interest rate remains the same throughout the life of the loan.  Your payment never increases or decreases.
  • Graduated Payment Mortgages:  These mortgages start with low payments, but climb slowly.  They are recommended for those who currently have low incomes but expect significant salary increases within ten years.
  • Growing Equity:  If your income is minimal, a growing equity mortgage allows you to start of paying a minimal amount towards interest and then it increases over time so that principal is being paid as well.
  • Mortgages for Condos:  Those who are buying condominiums will want a mortgage that applies to a condo where you own the building, but grounds are generally owned and cared for by the homeowners association.

You will be responsible for a small down payment towards the home's purchase price, but the FHA works closely with a number of companies who offer grants to first time buyers.  If you simply lack the finances, you can apply for grants to help come up with free money to apply towards your purchase or closing costs.  Each of the following companies limits the amounts they will give you, but the good thing is that they are gifts, so you do not need to repay them.

  • AmeriDream
  • Consumer Debt Solutions
  • HART
  • Partners in Charity
  • Nehemiah

VA Mortgages

VA mortgages are offered by the United States Department of Veteran's Affairs.  To qualify for a VA mortgage you must meet at least one of their strict guidelines.  Certain dates also apply to their guidelines, so be sure to ask if you are not certain you qualify.

  • Served continuous active duty for 24 months.
  • Served for active duty (90 day minimum) during the Gulf, Korean, Vietnam or Third World War.
  • Served for a minimum of 181 days continuously during peacetime and not been dishonorably discharged.
  • Served in the National Guard or Selected Reserves for at least six years.

With a VA loan, you may qualify for low-interest loans if natural forces destroy your home.  The VA usually caps loans at $144,000 for both purchases and construction, so you will need to make sure the home you want to purchase qualifies for their program.  In certain situations, Freddie Mac will allow an additional 25% of the home's value to be borrowed.  If not, you will need to find an additional source of funding for the balance.

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