FHA loans recently changed?

Question

I am unsure if I should go with a FHA or traditional 30 yr loan.... With the traditional it would have to be 20% down and I don't have the funds quite there... Close! But when I went to the bank and talked to a mortgage officer he said recently the FHA loans have been terrible and not worth it. The extra monthly payments you have to make are for the lifetime of the mortgage now and not only 5 years or so.... Has anyone else heard this? At the time the guy was telling my I could do 5% with a traditional and ran all the numbers for that... Then sends me an email a week later telling me it has to be 20%, not 5%
For Multifamilies.... Needless to say on that one I'm going with another bank!

Account Closed · Answer

Well you could probably just refinance to a conventional loan once you are at 20% equity, right?

Matt Devincenzo · Answer

Tiffany Toukatly generally speaking after you live in your home OO for 1 year you could go and qualify for an additional OO loan. The OO status applies to your intent to occupy for 12 months minimum, after the 12 months you've met your obligation. The bank will likely not count your rental income until you have had 2 years of land lording experience then they would allow it to offset you DTI.

To link the "@" just type @tiffany..... before you finish typing a name box should pop up below the comment box and you can click the name. If you type the name the whole way out it won't link for you.

Robert Adams · Answer

Rates and fees for FHA are up

Account Closed · Answer

Thanks for all the replies!! @Joel Owens so the 5% down would be acceptable if it was an owner occupancy (which is what I would do)? I didn't even think of that, but it makes sense!  If I were to buy another duplex after my first and live in that one as owner occupancy- would the 5% down still apply or no because it would be my second mortgage? Oh and am I doing the "@" thing right? Is there something special I need to do to get it to hyperlink? In my late 20's and already behind technology!! Oi!

Joel Owens · Answer

Tiffany the mortgage person may have been getting confused.

Say if you are buying a duplex, tri-plex, or quad then maybe he was quoting going FHA 3.5% down or conventional at 5% for you living in one unit and renting out the rest . I know conventional will sometimes do 5% if credit and income is really strong. The worse that gets the higher payment they want.

Conventional has insurance as well but it is generally cheaper than FHA.

FHA insurance is horrible with the rates they have now. FHA is making new borrower pay for losses from the foreclosures of the past to shore up FHA's budget crisis. A new study shows FHA losses to be over 100 billion when all is said and done compared to the 60 billion that has been projected. That means more than likely higher insurance rates and points upfront.

For straight conventional 20% down for a non-owner occupant investor loan is standard. You could check into whether they bank would allow the seller to carryback a 10% second loan thereby allowing you to put 10% down instead. The bank will still be at the same ltv for the first of 80% the bank just has to approve the secondary debt the seller will be holding.

Wayne Brooks · Answer

Yes, the monthly MIP payments are for the life of the loan on FHA, since April,  for ALL LTV's.

Scott W. · Answer

& they also raised the 1x fee of like 1.75% of the loan. so if you buy a house for $100k, they ding you for $1750 at closing (may have even gone up; I lose count as our govt is broke & trying to cream the consumer).

Wait until you have 20%. You'll be thankful later.

Matt Devincenzo · Answer

Yes there was quite a bit of talk here on BP for a few months of PMI now being for the life of the loan starting on June 1. So now if you decide to go with a less than 20% DP you will have to factor in that extra cost.

For a multi family investment property I've never heard of being able to get less than 20-25% DP with the traditional lenders. Not saying it doesn't exist it's just not something I've seen.