Out: Exotic Loans, 100% financing; In: FHA, VHDA!

FHA is back with a vengeance. It’s a key tool in the current lending environment for getting buyers qualified with only a 3% down payment (with gifts permitted in certain circumstances.) There are a few extra hoops to jump through, but I find more and more buyers are utilizing FHA now that the lending limits have been increased in our area.

The Virginia Association of REALTORS has this webcast “Mortgage Lending in 2008: Back to the Future, How FHA can help you and your clients,” for agents, but I think it provides a good overview of FHA for anyone thinking of buying. At about an hour, it’s a bit long, but worth it.

Some Restrictions on Condos
FHA won’t work in some instances, though. Sometimes condos–especially new construction–gets tough. Condos must be on the FHA-approved list to qualify. If it’s not on the list, it’s still possible to get a spot-approval, but it must meet certain other criteria, e.g., more than 60% owner-occupied, which sometimes is problematic with condos. Some of the criteria may be streamlined as part of an expected upcoming FHA modernization, though, so stay tuned.

VHDA Loans
Another great option for first time buyers in our area are programs through VHDA (Virginia Housing Development Authority), which provides a variety of low-interest loan programs and low-down payment options for buyers who meet certain maximum income limits and property price restrictions. You also must not have owned a home in the previous 3 years unless you’re buying in a designated target area, must attend a VHDA-approved educational seminar, and meet certain other guidelines.

Read more: Mortgage Loans: Jumbo, Conforming, FHA, and Jumbo Lights

Read more: Why Don’t Fed Cuts Always Cause a Drop in Mortgage Rates?

Read more: What is Private Mortgage Insurance (PMI)?

Want to learn more or have more questions? Attend a free first time home buyer seminar that I teach.

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