An FHA loan is a loan that is funded by an FHA approved lending institution and insured by HUD. FHA loans are a great option because the interest rates are low even though the loan to value ratio can be high. Borrowers can put as little as 3% down! FHA loans are great for first time home buyers and buyers with less than perfect credit.
With an FHA loan the borrower is responsible for paying a mortgage insurance premium. The mortgage insurance protects the lender if the borrower defaults. The premium can cost 1.5% of the loan amount and can be financed into the mortgage. The borrower will also be responsible for an annual mortgage insurance cost of .5%. The annual mortgage insurance will only be required until the loan to value ratio reaches 78% or less.
Here are some other facts about FHA loans
- The maximum mortgage payment to gross monthly income ratio is 29%
- The maximum total amount of recurring monthly debt and recurring installment debt to gross monthly income ratio is 41%.
- You can purchase a home in need of repairs and finance the repair costs with the mortgage. This is a great option if you are considering buying a foreclosure in South Lake Tahoe due to the fact that many of the foreclosures are in need of some kind of repair. Click here to view a list of foreclosures in South Lake Tahoe currently listed on the South Lake Tahoe MLS.
- Buyers can purchase a home with as little as 3% down.
- A termite report is required, and all section one and section two termite work will need to be repaired.
- FHA has a loan program for condos, variable interest rate loans, and loans for making the home energy efficient.
- FHA loans are for your primary residence.
- Visit the HUD website for more information about FHA loans.
Currently there is a large inventory of homes for sale in South Lake Tahoe on the South Lake Tahoe MLS. An FHA insured loan may be a great resource for buyers to take advantage of a buyers market and own a piece of Tahoe!