What Is An FHA Loan:
We explain what is an FHA loan. This loan product is usually for first time home buyers to help them purchase a new home. Although one does not need to be a first time home buyer. The down payment amount, debt to income ratio, and fico score requirements are reduced compared to other loan products. 3.5% down payment is the requirement as long as the borrowers fico scores are equal to or higher than 580. If your fico score is less than 580, one would need to put 10% down.
FHA Loan Limits:
FHA loan limits vary depending upon county. See the attached website link to determine your loan limit amount. FHA loan limits change yearly so check back if you are checking this website anytime in November and December but aren’t planning on obtaining a new home until January or February. https://entp.hud.gov/idapp/html/hicostlook.cfm
FHA Gift Funds:
What are FHA gift funds? This is when you don’t have enough money to cover your full down payment amount. A typically FHA loan requires 3.5% down payment. Gift funds is when an immediate family member such as your mother, father, brother, sister, aunt, or uncle gives your some or all of your down payment money. They sign a gift letter form. On this form they state their name, address, amount, and relationship to you.
Furthermore, they also supply a copy of their bank statement that shows they had the amount of the gift money already in their account. Basically, they can not get money from me then transfer it to their account and then transfer it to you. The borrower will then deposit the gift funds into their bank account. Finally, the borrowers will need to print out a new bank statement balance that shows the gift funds being deposited into their account.
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Article 1: What Is An FHA Loan