Type of Kentucky FHA loans available

FHA loans are government-backed, which protect lenders against defaults, making it possible to offer prospective borrowers lower interest rates. Keep in mind that the FHA doesn’t actually lend money to borrowers, nor does the agency set the interest rates on FHA loans, it simply insures them.

Because FHA loans are government-insured, they have easier credit qualifying guidelines than most lenders, as well as relatively low closing costs and down payment requirements.

With an FHA loan, your down payment can be as low as 3.5% of the purchase price, and closing costs can be bundled with the loan amount.

Types of FHA Loans

The FHA has a variety of loan programs for first-time homebuyers, along with reverse mortgages for senior citizens, and has insured more than 34 million mortgages since 1934.

FHA loans are available for both purchases and refinances, including cash out refinances. FHA loans can be used to finance residential 1-4 unit properties, including condominiums, manufactured homes and mobile homes (provided it is on a permanent foundation), but you can hold only one FHA loan at any given time.

FHA loans can be either adjustable-rate mortgages or fixed-rate mortgages. If the interest rate is adjustable, it will be based on the 1-Year Constant Maturity Treasury Index, which is the most widely used mortgage index.

 

FHA Mortgage Insurance Premium Costs

If the loan-to-value (LTV) is greater than 80%, mortgage insurance is required. FHA loans have an upfront mortgage insurance premium equal to 1% of the loan amount. This is typically bundled into the loan amount and paid throughout the life of the loan.

You must also pay an annual mortgage insurance premium if you take out an FHA loan.

Beginning October 4, 2010, if the loan-to-value is less than or equal to 95%, you will have to pay an annual mortgage insurance premium of 0.85% of the loan amount.  For FHA loans with an LTV above 95%, the annual insurance premium is 0.90%.

FHA Credit Score Requirements

Borrowers with credit scores of 580 and above are eligible for maximum financing, or just 3.5 percent down.

If your credit score is between 500 and 579, your FHA loan is limited to 90 percent loan-to-value (LTV), meaning you must put down 10%.

If your credit score is below 500, you are not eligible for an FHA loan.

The FHA, like any other bank or mortgage lender, has guidelines that need to be met, but generally makes it easy for potential homeowners to qualify for a loan.

Since the mortgage crisis struck, FHA loans have become increasingly popular, essentially replacing subprime lending, largely because of their relatively easy underwriting requirements and government guarantee.

But make sure you compare FHA loans with conventional loans as well. There will be cases when the benefit of one outweighs the other.

FHA loans are not guaranteed to be a better deal than other mortgages, so take the time to shop around. And watch out for unscrupulous FHA-qualified lenders who may attempt to misinform you.

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18 thoughts on “Type of Kentucky FHA loans available

    • Current Louisville Kentucky Mortgage Rates Today 06/11/2011

      Current Louisville Kentucky Mortgage Rates Today 06/11/2011

      Current Louisville Kentucky Mortgage Rates for today
      Mortgage Product Mortgage Rates (APR)

      15 Year Fixed Conventional 3.750% 4.135% apr
      30 Year Fixed Conventional 4.375% 4.834% apr
      30 Year Fixed Kentucky FHA 4.250% 5.275% apr
      30 Year Fixed Kentucky USDA 4.625% 5.288% apr
      30 year Fixed Kentucky VA 4.250% 5.189% apr
      30 year Fixed KHC 4.500% 5.377% apr

      Louisville Kentucky Mortgage Rates are subject to qualifying criteria and Louisville Mortgage Rates can change without notice

      Free Credit Report and Pre qualifications available anytime.

      Key Financial Mortgage of KY is a licensed mortgage company in the state of Kentucky (NMLS#1800) Key Financial Mortgage of KY is not a part of, nor are we affiliated with, the VA, FHA/HUD, USDA. These entities are a government agency, not a lender. They simply insures the mortgages; they do not loan the money. Joel Lobb (NMLS#57916) is a licensed mortgage loan officer in the state of Kentucky.

      Current Louisville Kentucky Mortgage Rates are updated daily at this blog

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