FHA Lending

[Jennifer Bondhus]

We're new to Texas and not sure if the same lending practices hold true for all states? We're wanting to buy an owner-occupied duplex or 4 plex. Would we be able to use an FHA loan for that? In Texas, is it required that we occupy the property for 12 months before moving out?

What happens after we move out and are ready to purchase another income property? Can we buy again using FHA with only the 3.5% down or are we only limited to one FHA property at a time? If we can't do an FHA again, are we stuck with our next purchase needing 20% down?

[Chris Simmons]

You will hear different things from the banks and they are all right. The banks are the ones making the loan....not FHA. FHA is just a guarantee that, provided certain conditions are met, can be placed on the loan to increase a bank's willingness to lend. Generally the conventional, non FHA loans have been cheaper and preferred and FHA was a backup for those that could not otherwise qualify for those loan products. The last 5 years has been atypical with the credit markets and such where FHA was either competitive with conventional loans, sometimes cheaper than conventional loans and unfortunately at times, the only choice for a mortgage.

Each bank has their own underwriting standards since again, they are the ones lending the money. FHA and Freddie Mac might let you have up to 10 mortgages....but I have banks that cut you off after 4. That's their choice. The banks make the rules you have have to follow to get their money. FHA has it's rules banks have to follow to get their guarantee.

Shop around and find a lender that has the products you want. They will help you run the numbers and see how much an FHA loan will cost you over a conventional mortgage.