FEATURES AND BENEFITS:
Down payments less than 3% (as low as 1.25% to 2.85%)
Gifted down (family, nonprofit, bridal registry) & closing costs OK
Non-occupying co-borrowers allowed
No income limits
Easier qualifying w/ more liberal qualifying ratios than conventional
Don't have to be first time buyers
No reserves needed
Previous credit problems ok on a case by case basis

LIMITATIONS:
Mortgage insurance required
Loan limits apply
Not available for investors

FHA Energy Efficient Mortgage
An Energy Efficient Mortgage recognizes the energy savings of a home. It allows the buyer (or homeowner who is refinancing) to qualify for a larger mortgage to finance the construction or installation of improvements that will increase the home’s energy efficiency. Improvements might include insulation, new energy efficient heating and air conditioning systems, new water heaters, etc. The maximum amount is 5% of the property value (not to exceed $8,000) or $4,000, whichever is greater. This loan can be used on existing single family homes or two unit properties (such as a duplex.)

The home must be inspected by an energy consultant. The fee for the inspection may be financed by the loan. The rating report will determine if the cost of the improvements (plus any maintenance costs) will increase the energy efficiency of the home. If the improvements will save money on the utility bills, the cost of the improvements may be financed in the loan.

Mortgage Insurance (MI)
If you have a down payment for your new home of less than 20%, the lender (the company that actually lends you the money to buy your new home) requires that you pay for mortgage insurance that will pay off the loan if you should not be able to do so. As soon as your home either appreciates in value or you make enough payments to reduce the principal amount to 80% of what the home is worth (loan to value ratio) then you may request that the insurance be cancelled.

With an FHA loan this is called MI (mortgage insurance) and with other types of loans it is called PMI (private mortgage insurance.) The amount that you pay is one-half of one percent (0.5%) annually of the unpaid balance of the mortgage. There is a one-time Upfront Mortgage Insurance Premium (UFMIP) that is charged and will be part of your "settlement costs" or "closing costs" that are required to close escrow on your new home. FHA 15 year loans have a 2.00% Upfront MIP Factor and the 30 year loans have a 2.25% factor. The UFMIP can be 100 percent financed or can be paid all in cash.

Example - for a 30 year loan:

For a $100,000 loan, multiplied by 2.25% UFMIP factor = $2,250

Example - for a 15 year loan:

For a $100,000 loan multiplied by 2.00% UFMIP factor = $2,000

If you want to finance 100% of the UFMIP, the total loan amount then becomes $102,250 on the 30 year loan. If you want to pay cash for the UFMIP, the amount is $2,250 and your loan amount is still $100,000.

Your monthly MIP (mortgage insurance payment) is collected with the monthly loan payment. (until the loan is at 80% of loan to value and you request that it be removed.)

To calculate the monthly charge for MIP on a 30 year loan, follow these steps:

Example:

$100,000 x 0.5% divided by 12 (months) = $41.67 a month.

Impound Account
When you have a loan that is greater than 80% of loan to value, the lender will require that you have an "impound account". An impound account is a form of "savings account" that the lender maintains for you and from that account the lender pays your property taxes in December and April and also your insurance premiums (includes hazard insurance and mortgage insurance.) We will be glad to calculate all the charges that are one time charges or those that will occur every month. We will make sure that there are no surprises.