Reno First-Time Buyers Consider FHA

First-time buyers considering a home purchase in the Greater Reno-Tahoe area would be wise to consider FHA financing.  There are many good reasons why FHA financing is a good option when purchasing a home in Reno and its surrounding communities.  FHA home loans are directed at first-time home buyers. However, the definition for a first-time home owner under FHA guidelines includes anyone that has not owned a home within the past three years.

Advantages of FHA Home Loans

    * Competitive Interest Rates
    * Controlled Closing Costs
    * Low Down Payment
    * Gifted Funds Allowed
    * Tax Credit
    * Easy Qualification

Competitive Interest Rates

    * FHA offers very competitive interest rates.  Usually, borrowers cannot find a better interest rate than FHA.
    *  It is important to note here that interest rates are on the rise for all home purchase loans.  Last month, interest rates were 4.75%.  Today's interest rates are 5.39%.  There is no indication at this time that interest rates will fall back below 5%.  Some experts believe that an interest rate of 6% is not too far off in the distance.

Controlled Closing Costs

    * FHA home loans have a 1% origination fee cap while conventional loans do not.
    * FHA has a strict policy on what closing costs can be charged to the borrower while conventional loans do not.
    * FHA closing costs are about 3%.

Low Down Payment

    * FHA down payment is 3.5% - 5%.

Gifted Funds

    * FHA will allow up to 6% in gift funds to the borrower from other sources.
    * FHA allows parents to gift you funds to be applied to the down payment or closing costs.
    * FHA will allow employers to gift funds which can be applied to the down payment or closing costs.
    * FHA allows state housing finance agencies and certain non-profits to help the borrower with funds for a down payment or closing costs.

Tax Credit

    * FHA is the only loan program in which the tax credit can be monetized.
    * The full 2009 First-Time Buyer Tax Credit can be used as an addition to FHA's required 3.5% down payment.
    * The 2009 First-time Buyer Tax Credit can be applied to closing costs.

Easy Qualification

    * FHA is a fully documented loan, but has been designed to see each borrower's credit history.
    * FHA does not have a credit score requirement.  A good repayment history is required.
    * FHA will allow credit substitutions such as a letter of credit from a landlord or utility statements.
    * FHA allows higher qualifying ratios.
    * Bankruptcy History: Chapter 13 where payments are being made as agreed; Chapter 7 has been discharged for two years or more.
    * Foreclosure History: The foreclosure must be at least 3 years old.

FHA is certainly a great option when considering your various loan options when buying a home.  Is it your best option?  That very much depends on your particular circumstances. However, If you don't have 10-20% down payment or a credit score of 720 (or above), then FHA would probably work for you.

Remember that the tax credit will soon be disappearing and interest rates are on the rise.  So buying now at today's low prices may be a very good move, indeed.