FHA Home Purchase Loan Program for home buyer in Mount Pleasant and Summerville SC by Homefront Mortgages

FHA Home Loan Programs allow Mount Pleasant and Summerville, South Carolina home buyers to purchase properties with a low down payment and typically lower rates and fees.

FHA reduces the risk of the lender by providing them with insurance or a guarantee in the case where a homeowner fails to fulfill their obligation to make monthly mortgage payments and defaults that may lead to foreclosure.

How to qualify for an FHA Home in Mount Pleaant and Summerville, South Carolina

The FHA Home loan program was created in order to protect lenders while simultaneously helping first time Mount Pleasant an Summerville home buyers purchase a home. Insurance protects banks who lend to borrowers from any losses due to foreclosures and/or the borrower's failure to keep up with their monthly mortgage payments. If situations like this happen, the Federal Housing Administration (FHA) will step in to help pay off the mortgage to the bank.

This guarantees the bank that they are protected from circumstances like this. Since the bank sees less risk, bank can lend out with lower qualification requirements. The Benefits of the FHA Home Loans Program are:

- Low Down Payment - Even as low as 3.5% down payment, and the money used towards your FHA down payment can be a gift from a charity, employer or even just money from a family member.

- Credit / History - You do not need to have a perfect credit scores, and can even qualify for a new FHA loan recently after a short sale or within a few years of a bankruptcy or foreclosure.

- The FHA has many different options to help prevent foreclosures from occurring due to hard times for homeowners, allowing them to remain in their homes.

- The interest rates are extremely competitive due to the federal government's insuring of the loans that helps in the protection for lenders.

An FHA home purchase loan can help you get your monthly mortgage payment down but you must be sure that you are eligible.

The FHA Mount Pleasant and Summerville FHA Loan Requirements

The FHA (Federal Housing Administration) was established over 70 years ago as a part of the National Housing act of 1934, in order to help out homes that need improvement, especially after the Great Depression there were numerous home foreclosures and a huge drop in the housing market as well due to failure in the banking system.

FHA has insured millions of home mortgages with a market share of 30% in 2010 vs 3% in 2007. Later in 1965 The FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing. HUD is a division of the U.S. federal government, it is a program that President Lyndon Johnson set in place and was put into law in 1965.

The FHA Eligibility Requirements may include:

- A credit score of at least 530 (640 is preferred)
- 2 years of steady employment/income
- No bankruptcies within the past 12 months
- No foreclosures within the past 3 years
- The borrower must reside in the Summerville, South Carolina home as a primary residence

If you do have a spouse as a co-signer, please keep in mind that their credit may be checked in the process of approval as well.

FHA-Approved Appraisal Required

An appraisal is required as well, but the appraisal must be ordered through a third party appraisal management company. During this process they usually look for repairs in conditions from minor defects, cosmetic defects to normal wear and tears.

Loan-to-Value (LTV)

The typical maximum LTV for an FHA loan is 96.5% for a purchase loan. This means that you will have to bring 3.5% of the sales price in as a down payment. However, if the property appraises for less than the sales price, then you'll also have to bring in the difference.

Debt-to-Income (DTI) Ratio Requirements

There are two calculations. The first or Front Ratio is your housing expense-to-income ratio. This is your proposed mortgage payment PITI (principal, interest, taxes, mortgage insurance, and homeowners insurance) divided by your gross monthly income.

The second or Back Ratio is your total monthly obligations-to-income ratio. This is your gross monthly payment including Mortgage PITI divided by your gross monthly income.

South Carolina FHA loan requirements include a maximum debt to income ratio.

FHA maximum debt to income ratio is usually 54.99%. Most lenders may limit maximum debt-to-income to under 50% and some lenders to 45%.

Employment Verification

Employment Verification your most recent pay stubs, W2’s for the past 2 years and Tax Returns, however if you are self-employed or have been employed for less than 2 years the lender may ask for additional documentations such as; federal income tax statements and/or profit & loss statements.

Eligible Mount Pleasant and  Summerville Property Types

- 1-4 unit residences
- The borrower must live in the home
- Manufactured homes (mobile homes)
- Must be owner-occupied, this loan program may not be eligible for investment or rental properties

You may be able to qualify for your second home for an FHA Home Loan if the first home is not already a primary residence and you do not already have an FHA Home Loan in place for that home.

1-4 unit properties including condominiums are eligible; but please still check with your lender for manufactured housing eligibility.

Down Payment Requirements

The down payment for an FHA Home Loan is in most cases are considerably low compared to conventional mortgages. The minimum down payment for any FHA mortgage is usually 3.5% as opposed to at least 5% for conventional mortgages.

For example: If you were looking to purchase a $300,000 home, the down payment required would then be $10,500 at a 3.5% down. The conventional loan requirement for down payments is normally at 5% which would be $15,000 down payment required, that is $4,500 that you can use towards repairs to keep up the maintenance or your home and even closing costs instead, helping you save more money for other costly expenses.

Currently, rates are at 18 month lows. See if you are eligible for an Mount Pleasant and/or Summerville Mortgage Check List Today.

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