Chattanooga Real Estate Blog

The Federal Housing Administration has become a primary means of financing for U.S. home buyers due in part to the low costs involved.  Those costs are headed up which is going to limit the number of buyers yet again.

The maximum loan FHA can insure is scheduled to decrease in October.  On April 18 the mortgage insurance premium on FHA loans will increase a quarter of a percent.  The minimum down payment which has already increased from 3% to 3.5% is expected by many to go up to 5%.  These changes may put home ownership out of reach for many first time home buyers which represent 75-80% of all FHA loans.

If you are thinking of buying you should get things going before these changes go into affect.

Karen Rhodes Realtor
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Interest rates compliments of:

Mortgage South
Melanie Huddleston
1007 Ashland Terrace
Suite 104B
Chattanooga, TN 37415
423-648-7630

Conventional Fixed Rate

30 yr  =  4.25%

20 yr = 4.25%

15 yr  =  3.625%

FHA and VA

30 yr  =  4.125%

30 yr = 4.375%

Rates subject to change

Interest rates compliments of:

Mortgage South
Melanie Huddleston
1007 Ashland Terrace
Suite 104B
Chattanooga, TN 37415
423-648-7630

Conventional Fixed Rate

30 yr  =  4.%

15 yr  =  3.875%

FHA and VA

30 yr  =  4.%

30 yr = 4.25%

Rates subject to change

The Federal Housing Administration, or FHA, insures loans through its diverse programs for borrowers seeking to purchase a new home, renovate a fixer-upper, refinance their current mortgage, or make their current home more green. The flexibility offered by the program combined with its low interest rates and low cash investment makes FHA loan programs one of the easiest for borrowers to be approved for.

These have long been a favorite of first-time buyers and those with low- to middle-incomes.

Is FHA still beneficial if I’m purchasing a more expensive home?

The FHA uses a system of loan limits that vary by county. The average loan limit is $271,050 for a single-family home and $521,250 for a four-family home. But for more high-end real estate markets, such as those found around major cities, the loan limit can reach as high as $729,750 for a single-family home to $1,403,400 for a four-family home. Even for borrowers wishing to purchase a more expensive home, a FHA loan is still one of the most rewarding loan programs available. With a FHA loan, eligible borrowers will find benefits they would rarely receive with a conventional loan such as:

-Competitive interest rates

-A down payment of only 3.5%

-Regulated closing costs

-Lenient debt to income ratios

What are basic Tennessee FHA loan requirements?

Many borrowers find FHA loans are easier to obtain than conventional loans. They also come with competitive rates. While the FHA insures a portion of each loan, it doesn’t actually issue them. Borrowers will have to meet the conditions and requirements of their lender as well as those set forth by the FHA. In general, the program expects:

-2 years of steady employment without income decreasing

-a minimum credit score of 620

-a clean credit report two years after a foreclosure or after filing for bankruptcy

What other options do I have for financing?

When a borrower wishes to purchase a home for greater than the FHA loan limit in their area, they  have the option to use the FHA loan in conjunction with other financing options.

Contributed by:  Michael Blumreich

FHA has now announced more tightening of underwriting guidelines.

• Up front mortgage insurance premium increased to 2.25
• 10% down payment for buyers with a FICO of less than 580.
• Seller concessions reduced from 6% to 3%

No specific date on when these changes go into effect, just sometime in the spring.  Stay tuned!