The Federal Housing Administration (FHA) is the government agency responsible for insuring mortgage loans. The agency reimburses mortgage lenders should a mortgage loan go unpaid by a borrower. The guarantee that a loan will be reimbursed makes lenders much more willing to issue loans to individuals with less than perfect or non-existent credit histories.
To qualify for an FHA backed loan to purchase a property in Orlando, FL, prospective borrowers are required to make a down payment equal to 3.5% of the total loan amount. FHA loans also generally require that the borrower pay a monthly insurance premium against the risk of default. This premium is in addition to the monthly principal and interest payments that a borrower makes toward paying down his or her loan.
An FHA backed loan is only one mortgage option that is available to those who are interested in buying a home in Orlando, FL. Other government agencies also back loans and may actually offer better options for home buyers. Because of the variations in the programs, buyers are encouraged to speak with a Certified Mortgage Professional about all of the viable mortgage options that a buyer may have available. When a good option is found, the Certified Mortgage Professional can help the buyer through the loan application and approval process.
Because the FHA is a government agency, requirements for an FHA backed loan may change from time to time. This is another reason why prospective buyers are encouraged to speak with a mortgage professional. This professional will have the most up to date information on the requirements of the FHA program and the information that prospective buyers will need to know in order to move forward with applying for an FHA mortgage.
One thing that prospective buyers need to keep in mind is that the FHA does not control minimum credit score requirements. Because it only backs loans, and does not originate them, the FHA allows lenders to set their own minimum credit score requirements. Therefore, buyers looking to use an FHA loan to purchase an Orlando, FL home, should never stop working to improve their credit scores.
First time home buyers in the area of Orlando, FL are at a major advantage if they are approved for an FHA loan because the FHA allows the borrower to have a co-signer to help with approval. This is great for young buyers just starting out who may not have very extensive or impressive credit histories. When the primary borrower is in good enough financial shape to carry the loan on his or her own, the borrower can assume the entire loan without needing to refinance into potentially higher interest rates.
One major hurdle to being approved for an FHA loan in Orlando, Florida is employment verification. The FHA requires borrowers to show that they earn a steady income and that every penny of income earned can be accounted for.
A mortgage professional, as well as helping through the application process, can help prospective borrowers compile the necessary documentation in order to verify their income.
Chris Brown is the premier expert on HARP loans and Government FHA and VA loans. Please visit The Mortgage Chili Blog