Federal Housing Administration (FHA) loans are mortgages that have been backed by the
government and are mainly for middle class families or first-time home-buyers in El Paso.
These mortgages are normally insured by the government. FHA loans normally have low
credit scores and even low down payments under normal circumstances. FHA loans have
underwriting standards that are flexible and this enables loan applicants who may not have
sufficient credit terms and those that have low incomes to own homes. The applicants must
however pay FHA mortgage insurance for them to qualify for the loans and this is done to
prevent the event of loan defaulting. If a client can however pay more than a 20% down
payment then they are exempted from paying the mortgage insurance
government and are mainly for middle class families or first-time home-buyers in El Paso.
These mortgages are normally insured by the government. FHA loans normally have low
credit scores and even low down payments under normal circumstances. FHA loans have
underwriting standards that are flexible and this enables loan applicants who may not have
sufficient credit terms and those that have low incomes to own homes. The applicants must
however pay FHA mortgage insurance for them to qualify for the loans and this is done to
prevent the event of loan defaulting. If a client can however pay more than a 20% down
payment then they are exempted from paying the mortgage insurance
Applicants that pay the normal down payment of 3.5% or anything lower that 20% are normally
required to pay 2 main Mortgage Insurance Premiums, which cannot be canceled. These
premiums can only be avoided by the applicant selling their home or by refinancing into a
non-FHA loan. These premiums are:
Annual Mortgage Insurance Premium: This premium ranges from 0.45 to 1.05%. This depends
on the initial loan-to-value ratio, the loan amount and the loan term. Thos premium is paid
monthly hence the total cost is normally divided by 12.
Upfront Mortgage Insurance Premium: This premium is calculated as 1.75% of the total loan
amount and can only be paid after the applicant gets the loan.
required to pay 2 main Mortgage Insurance Premiums, which cannot be canceled. These
premiums can only be avoided by the applicant selling their home or by refinancing into a
non-FHA loan. These premiums are:
Annual Mortgage Insurance Premium: This premium ranges from 0.45 to 1.05%. This depends
on the initial loan-to-value ratio, the loan amount and the loan term. Thos premium is paid
monthly hence the total cost is normally divided by 12.
Upfront Mortgage Insurance Premium: This premium is calculated as 1.75% of the total loan
amount and can only be paid after the applicant gets the loan.
If an applicant for this loan is applying for a second or more time, then they are required to be
using the loan money to buy only a primary residence in the county. The closing costs in FHA loans
are usually charged between 3 to 5% of the total loan amount. This figure may vary up to 6% if
the clients involved are home builders or home sellers.
using the loan money to buy only a primary residence in the county. The closing costs in FHA loans
are usually charged between 3 to 5% of the total loan amount. This figure may vary up to 6% if
the clients involved are home builders or home sellers.
Private lenders that offer FHA loans are normally insured. Since FHA loans target a very big audience,
a few guidelines have to be met by applicants to keep this program sustainable. A few of these
guidelines include:
The applicant must have a back-end debt ratio that is not more than 43% of their gross monthly
income. In special cases an allowance of 50% is allowed.
The applicant must have a gross end ratio that is less than 31% of their monthly gross income.
The applicant must be using the loan for a primary residence within the county.
If the credit score of the applicant is 580 or more then a down payment of 3.5% is required but if it
is between 500 and 579, a down payment of 10% is required.
The applicants must be able to show proof that they are currently employed or they have a record
of being employed for the last 2 years.
The applicant must have a source of income that will be used in servicing the loan.
a few guidelines have to be met by applicants to keep this program sustainable. A few of these
guidelines include:
The applicant must have a back-end debt ratio that is not more than 43% of their gross monthly
income. In special cases an allowance of 50% is allowed.
The applicant must have a gross end ratio that is less than 31% of their monthly gross income.
The applicant must be using the loan for a primary residence within the county.
If the credit score of the applicant is 580 or more then a down payment of 3.5% is required but if it
is between 500 and 579, a down payment of 10% is required.
The applicants must be able to show proof that they are currently employed or they have a record
of being employed for the last 2 years.
The applicant must have a source of income that will be used in servicing the loan.
Many money lenders offer FHA loan services in El Paso. This ranges from independent lenders to
banks or even credit unions.
banks or even credit unions.
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