Friday’s Rates and FHA 4-1-1
Rhonda Porter on 05 4, 2007
Update October 8, 2008: Many guideline changes have happened with FHA since this post was written in May 2007. I am working on a new post with current information for FHA. This is a good example of why you cannot rely 100% on information you find about mortgages on the internet: guidelines are not written in stone.
Ardell is grinning right now…I just know it! Rates are unchanged compared to the rates I posted last Friday and the Friday before that. 
I haven’t been posting FHA rates at RCG. I thought since I have all of this extra white space on this post due to the unchanged rates…why not provide some basic info on FHA mortgages. With the tightening in the subprime market, FHA loans are back.
Today’s current rate for FHA 30 Year Fixed is 6.250% (APR 6.256%). Payment per $1000 (including the low monthly mortgage insurance) is $6.58.
The current loan limit for FHA in King, Snohomish and Pierce Counties for single family dwellings is $362,790. (Updated: temporary loan limits are higher than reflected).
FHA allows for a minimum down payment (roughly 3%, buyer contribution only needs to be 3% and may be gifted from a family member or granted).
There is upfront and monthly mortgage insurance on all FHA insured mortgage loans. (if you’re buying a condo, then there is no upfront mortgage insurance a condos should be FHA approved). The upfront mortgage insurance for a purchase is 1.5% 1.75% of the loan amount and is financed. The monthly mortgage insurance is 0.5% of the base loan amount divided by 12 months. Update 7/14/2008: FHA now has risked based pricing for upfront and monthly mortgage insurance. FHA mortgage insurance can be removed after 5 years and the mortgage is at 78% of the original loan balance. (Risk based pricing is on a 1 year moratorium and may take effect October 1, 2009).
One of the great features with FHA is that it offers a low down payment and is not credit score sensitive. FHA is concerned with the last 1-2 years of the borrower’s credit history and can be forgiving with “common sense” situations, such as credit lates as a result of a medical situation. Home buyers who have been out of their bankruptcy for two years are also eligible for FHA financing. Non traditional credit lines can also be used (such as cell phone payments, utilities, rent) for buyers who do not have established credit history of 12 months.
The back end ratio (proposed total mortgage payment plus current monthly debts) that is commonly allowed in FHA is 43% of the borrowers monthly gross income. Expanded ratios are possible depending on the strength of the borrower. There are no income limitations or geographical restrictions with FHA financing.
There are certain closing costs that a buyer is not allowed to pay (approx. $475-$500) which is typically paid for by the Seller.
FHA is a solid option for first time home buyers, or anyone, needing a minimum down payment option who fits with the loan limits.
About the Author: Rhonda Porter
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14 Responses to “Friday’s Rates and FHA 4-1-1”
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LOL…next time I counsel buyers to call lenders on day of contract sign around, within a 3 hour period, to check rates before applying and locking, I expect you won’t be coming around to tell me that method won’t work because rates will change in that 3 hours
Is the monthly MIP rate the same for condo vs. single family, given there is no up front MIP for the condo?
Ardell, be careful
rates CAN change within 3 hours time. It will work for you most of the time…but the times it doesn’t OUCH.
They’ve just been hanging tight lately in a very nice spot. 30 year fixed under 6!
The monthly MIP is the same for the condo as a SFD.
FHA is also, as Paris Hilton would say, so HOT for 2-4 plex. The home buyer must live in one of the units, they get the same low down benefits (higher loan amounts) and owner occupied rates…again I stress, it MUST be owner occupied.
Thanks for hthe update Rhonda and the scoop on FHA. I certainly wish I could find someone like you to post for me in Salt Lake.
Thanks, Keith. You’ve made my Friday.
Have you checked out Active Rain for blogging Mortgage Professionals? I can send you a linnk if you need one.
I thought though, with an FHA loan, there is no flexibility with PMI, that regardless of equity, it is carried through the life of the loan.
With FHA, you need to have the loan for five years and have a 78% loan to value to have the monthly mortgage insurance removed.
“With FHA, you need to have the loan for five years and have a 78% loan to value to have the monthly mortgage insurance removed.”
I did not know that, Rhonda. I thought MIP was on for life. It’s been 4-5 years since I closed a HUD loan.
Hi Brian,
I should add that there cannot be any 30 day mortgage lates within the past 12 months (duh).
The only FHA loan I did last year was to pay off a bankruptcy. It actually worked pretty sweet.
Straight from HUD:
If you paid an upfront mortgage insurance premium, you will also
be charged a monthly mortgage insurance premium until the loan to
value ratio of your mortgage reaches 78 percent of the initial
sales price or appraised value of your home, whichever was lower
(provided that premiums are paid for at least five years). You
will reach the 78 percent loan-to-value threshold in one of two
ways: Through normal amortization as you make your monthly
payments, or by paying additional principal on the mortgage.
Your lender can advise you on when the mortgage will reach the 78
percent level through normal amortization.
[...] FHA 30 Year Fixed: 6.500% (APR 7.119%) Payment per $1000 = $6.32 (not including MI). [...]
[...] FHA 30 Year Fixed: 6.375% (APR 6.881%) Payment per $1000 = $6.24 (not including MI). [...]
[...] I’ve covered FHA before…and the guidelines for traditional FHA are pretty true for the temporary Jumbo FHA mortgages as well. Here are a few more pointers for our current market: [...]
What is an FHA loan? I have a low credit score and am looking to buy a condo. I am currently paying off negatives on my credit report and trying to save for a place. Working two jobs. Any idea if I would qualify for an FHA loan??
mare, you need to have no late payments for the past 12 months and decent credit to qualify for a FHA loan. I recommend meeting with a local mortgage professional who is experienced with FHA mortgages.