Fun FHA Facts

Word on the street is that FHA loans are the new subprime, and according to recent news, there may be even better news on the horizon for borrowers with less than stellar credit, even those who need to refi.
What with all the subprime hubub, FHA loans haven't come into play as much the last few years. According to Investopedia.com, an FHA loan is:

"A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA loans allow the borrower to borrow up to 97% of the value of the home. The 3% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time buyers."

But it's not only low to moderate income borrowers or first time home buyers who can benefit from an FHA loan. FHA is also good if your credit score is a little low. FHA will accept a minimum credit score of 580, whereas the minimum for a conventional loan has gone up to 620. It definitely gives you a little more wiggle room.

In addition to allowing a 3% gift, FHA also allows up to 6% in seller concessions, almost twice what most conventional loans allow. That's a lot of closing costs!

Best of all, the FHA loan limit for Knox county was just raised to $271,050 (FHA loan limits for others counties can be found here). With that kind of money, you can almost certainly find yourself some very sweet digs in our fine city.