FHA loans if I have 20% for a down payment?

Question

Hi,
Is there any advantage to using an FHA loan if I have 20% for a down payment? I've heard that the rates can be lower and refinancing is easier with an FHA. Are there any other advantages?

Also, do most banks these days offer FHA, or do I need to go to a special lender?

Answer 1

Yes, there can be an advantage. A 20% down FHA loan for borrowers who have limited credit history. This avoids higher interest rates. One example is a recent graduatue, who has adequate income to qualify for loan.
Parent(s) can also buy a property to be used for college student. The parents puts 20% down, and has the student listed as one of the borrowers. This helps the student get a credit history. And, the student can rent out rooms to help cover the mortgage. At time of graduation, the property can be sold, and the cost of school housing is recouped. If the student wants to continue liveing there, the student can assume the loan that the parent(s) originally obtained. This is not usually the case in a conventional loan.

Another example where is can be helpful is for purchase after a division of assets in a divorce. If the income is there to qualify, the rate may be lower than the alt-a rate that may otherwise have to be used.

It is not uncommon for banks not to offer government loans such as FHA, VA, or Rural Housing. Not only does the institution need to want to provide these loans, they also need to be government approved to provide these loans. There is more paperwork required, and some banks do not want to be bothered with it. Carteret Mortgage Corporation a full service Mortgage Broker that DOES offer these government loans.

Answer 2

If you have 20% down there would be no advantage with an FHA loan. FHA loan rates are a bit higher, actually, in exchange for the government guarantee on the loan. The whole idea with an FHA loan is to get folks with less than the normal downpayment into a home without having to pay PMI. An FHA loan will usually be less costly than a conventional with PMI or two loans with an 80/20 split.

Answer 3

Another issue with FHA is their inspection, which is much more stringent than other inspection I have had the displeasure of dealing with. If the house fails FHA inspection for peeling porch paint, you have to get it fixed, wait for the reinspection and moving at the speed of government, for the loan to crawl through underwriting.

FHA is better for those with limited down payment. If you have 20% down, avoid FHA.

Answer 4

I would use a specialty lender. I recommend First National Banc Corp. They do business in most states and are your best opportunity for someone to say yes. ADDITIONALLY, IF YOUR CREDIT IS SUSPECT, THEY SOMETIMES FRONT THE MONEY TO GET YOU INTO A CREDIT RESTORATION PROGRAM SO THAT YOU CAN QUALIFY FOR A LOAN. Check out the free evaluation form at the source website and a First National loan officer will contact you within 24 hours. Good luck.

Answer 5

if your credit is good then there is little advantage and alot more paperwork. as for lenders some do and some dont if have to ask.