TEXAS FHA LOAN GENERAL INFORMATION 

FHA is an abbreviation for The Federal Housing Administration. Congress created the FHA in 1934 to make it easier for homebuyers to get mortgages. They do this by insuring mortgages for single family and multifamily homes. FHA mortgage insurance provides lenders with protection against a loss if a FHA homeowner defaults on a loan. Loans must meet requirements established by the FHA to qualify for this insurance. FHA and HUD have insured over 34 million homes since 1934. They are the largest insurer of mortgages in the world. In Harris County the maximum loan amount for a single family FHA home loan is  $200,160, as of September 2006. Texas Capital Mortgage is located in Houston and offers FHA loans anywhere in Texas.

 BENEFITS OF AN FHA LOAN  

Ø      It is easier to qualify for an FHA loan in many cases. This is because the lender has less risk of a loss in case of default. A customer with credit problems, such as bankruptcy, may qualify for a FHA mortgage.

Ø      Low down payment. A FHA down payment is generally 3% (sometimes less). Other loan programs often require a larger down payment.

Ø      Lower interest rates. FHA loans have competitive rates because the loans are insured by the Federal Government.

Ø      Helps you keep you home. If you encounter hard times after buying your home, the FHA has many options to avoid foreclosure and to help you keep your home.

Because of these benefits a FHA loan can be the best choice for many home buyers. This can also be an ideal program for first time buyers.

 GENERAL GUIDELINES TO QUALIFY 

Ø      Mortgage payments should be about 30% (or less) of the applicant’s total gross income. Total finance payments, including credit cards, auto payments and other monthly obligations should be 41% or less.

Ø      The applicant should have at least two years of steady employment, preferably with the same employer.

Ø      The applicant’s income must be steady or increasing.

Ø      Only one Federal insured loan may be open at one time.

Ø      Two lines of credit are required. However, if an applicant doesn’t have sufficient credit showing on their credit report the FHA may allow substitute forms. (For example a record of rent or utility payments).

Ø      If the borrower has a bankruptcy it must be at least two years old. In addition good credit must have been re-established since the bankruptcy.

Ø      If the borrower has had a foreclosure, it generally must have been at least three years ago.

Ø      Collections will sometimes need to be paid off as a condition to a loan. Judgments will have to be paid in full prior to closing. Applicants that are delinquent on any federal debt, (student loan, tax liens, etc.) are not eligible for a FHA loan. There is no specific credit score requirement. The lender will be most concerned about credit history for the last 2 years. There should not be any payments 30 days late in the last 12 months. Recently lenders have been requiring a 580 or better FICO credit score to apply.

 HOW TO APPLY FOR A FHA LOAN 

Texas Capital Mortgage participates in FHA loans. We accept applications at our office, by phone, or on our website. The application form for FHA loans is the same as for other types of loans. We can also have a licensed loan officer visit your home or business if that is more convenient. We suggest that customers allow us to review your needs and offer you a comparison to other types of loans. Some conventional loans have "FHA look alike" programs to compete with FHA loans.  A FHA loan is not always the best loan choice for every situation.  Please take advantage of our free, no obligation, credit review and consultation service.