FHA Loan - An FHA loan is a home mortgage that allows for a purchase or refinance with a low down payment. An FHA loan is designed to help those who would otherwise not be able to afford a down payment on a home, and also for those who do not qualify for other types of mortgages.
FHA will go 95% cash out for a refi note this applies to a
current active second note. In sense we are paying off a Combo Loan
into a single note. See www.efanniemae.com for the Geo Coder on loan limits. Other lending issues apply such as current note vs proposed.
AN FHA loan will allow someone to qualify using non-traditional credit as well. Non-traditional credit items include rental history, electric, cable, phone, and gas bills. Any other bill paid monthly can be used as well. A 1 year history of timely payment for 4 different accounts can qualify a consumer for an Fha loan with little or no traditional credit established.
An FHA loan is an excellent way to purchase a mult-unit dwelling as well. FHA allows for Owner-Occupied purchases of 2-4 unit properties with as little as 3% down. An FHA loan also allows for up to a 6% seller concession. For 3-4 unit properties, 3 months mortgage payments are required as reserves after closing.
An FHA loan is a great program because a low credit score does not automatically disqualify you. You can qualify with a low or even no credit score as long as you can document 1 year of timely credit payments. Exceptions can be made with strong compensating factors and a good letter of explanation.