FHA in the New York Times

The New York Times presented a brief piece about FHA insured loans.

I attended the grand opening of the Hamilton Lofts development in Harlem last week.  The developer and sponsor of this brand new condominium project, Romy Goldman, has done an exceptional job: the finishes, the thoughtfulness and attention to every detail are very impressive.  More impressive still is Romy’s understanding of the nuances of financing for her potential buyers, especially with regards to FHA Insured Financing.   She had the condominium approved by HUD to allow her potential Buyers to purchase using the FHA program.   On the entire island of Manhattan there were only 7 other approved condominiums for FHA financing.   Romy was definitely ahead of the curve: her project is the eighth approved condo in Manhattan.


The New York Times presented a brief piece about FHA this past Sunday; they interviewed Romy Goldman and included her thoughts on FHA in the article.

My favorite quote from the article, “According to Meg Burns, the F.H.A.’s director of single-family program development, these loans actually perform very well. “That’s kind of a shock to most people because we serve borrowers with riskier profiles,” she said. “But we have pretty stringent underwriting standards. You have to have sufficient verifiable income and employment to make your mortgage payments.” YAY FHA!!!


Here’s the article: FHA Loans Help Sales

Boston Triple-Deckers: A Suggestion

Buy your first home—a New England triple-decker—and use the FHA 203k Rehabilitation Loan to do so. Your purchase money and repair money can be had in a single, convenient, 30year Fixed Rate Loan.

Today’s NYTimes.com features an article about that particularly New England home, the triple-decker. These are lovely homes from the 1890’s built to house the influx of immigrants from Europe. These homes were a wonderful alternative to the tenement housing of the time. In the ensuing years, triple-deckers have come to describe the character of a neighborhood, whether in Boston or New Bedford. Dennis Lehane, author of “Mystic” featured these homes much like characters in his book (and in the subsequent film directed by Clint Eastwood).

My wife lived in one for a time when she lived in the Boston area and has fond memories of her time living in a triple-decker.

Today’s NYTimes reports of the foreclosure blight affecting this beloved New England icon.

I have a suggestion for any of you first time buyer folks living in a town with triple-deckers: go out and buy your first home—a triple-decker—and use the FHA 203k Rehabilitation Loan to do so. NYTimes reports there are many foreclosures selling far below market. This is the ideal opportunity to purchase a first home at a considerable discount and obtain the money necessary to renovate that home to your specifications. As the article points out, triple-deckers have long been the domain of first time buyers looking for an affordable option for homeownership: the rental of the other two apartments helped homeowners offset their monthly mortgage payments.

The FHA 203k Loan is a program wherein the Lender provides you with the money to purchase the home (acquisition) combined with the money to improve the home (construction) in one closing and with a single 30year fixed mortgage payment. I am an expert in this program having originated many such loans in Harlem and Bedford-Stuyvesant in the early-mid 1990’s under President Clinton’s initiative to rehabilitate inner cities using the FHA 203k program. We encountered a similar experience then in those communities that New Englanders now face with these triple-deckers: historic brownstones, multiple families of 3 and 4 family properties, were in need of serious rehabilitation and presented first time buyers with an excellent opportunity.

With this program, you make your 3.5% downpayment off the purchase price of the home. You present to the Lender your plans for renovating the property. These plans are prepared in consultation with your contractor and an independent FHA Certified Consultant. The Lender uses your proposed improvements both to appraise the house at “future value” after improvements and to make the final loan decision. Minimum repairs are $5,000 with most Lenders. A feature of the program allows you to include up to 6 months’ worth of mortgage payments in the loan so you don’t have to worry about paying rent on your current apartment and a mortgage on your new home while your contractor completes the renovations.

The Seller of the home receives her money (your 3.5% downpayment and the Lender’s portion of the acquisition loan) at the closing table and you receive title. Your repair money is placed in an escrow account upon closing of title: your contractor receives the go-ahead to begin work with the renovation money available in up to 5 “draws” or payouts depending on the amount of construction/renovation.

FHA Loans are only available for Owner-Occupants; Investors are not permitted. You don’t have to be a first time buyer to qualify, either.

FHA Loans require you qualify based on your income, assets, and credit, although the criteria are much more flexible with most FHA Lenders than with Conventional loan programs. There are no income limitations; the program is available to all American Citizens, Permanent Resident Aliens, and even Aliens working with Authorization from the U.S. Government. FHA is an insurance program so you’ll be paying two insurance premiums (one Upfront at closing, financed in the loan for thirty years, the other built into your monthly payment), and you must pay those premiums regardless of the size of your downpayment (even if it’s more than 20% down).

You can find an FHA Lender in your area at the FHA Website along with more information on the FHA program. If you live in a New England town or city where there are triple-decker homes in need of your love and attention, and you want to get a great deal on your first home, I strongly recommend you consider this financing option to help you make that dream come true. You’ll be doing something good for you, and for the historic quality of New England, too.

Hope that helps!

I’m Going To Be Sick

The New York Times reports today on targeted racial discrimination by Wells Fargo.

The truth comes out, and I am so disgusted by it that I literally want to vomit. I knew there were shenanigans going on back in the day—I watched my clients evaporate before my eyes when I told them they could get a 30yr Fixed Rate loan if they only purchased a cheaper home. Those clients went elsewhere for their mortgage financing, preferring to “drink the koolaid” with mortgage “professionals” peddling loans that were affordable for about the first fifteen minutes after closing.

As much as the “boom” was great for lots of people in the mortgage business, I watched my originations decrease. I made less money. I started writing tcurranmortgage.com as a way to maybe, possibly, sorta-kinda, hold on to clients by demonstrating more about who I was as an originator and how I really had their best interests in mind. I guess I had some vague hope that the clients would read my blog, come to realize they were being bamboozled by the “other mortgage person” and stick with me. They didn’t. (It’s okay, I sleep very well at night)

Little did I realize then—I guess I am that naive—the kinds of officially sanctioned shenanigans going on at companies like Wells Fargo Home Mortgage. Read more about it in today’s NYTimes.com article linked HERE.

You might want to be sick while you read.

Excuse me…I think I’m going to be ill…

Use a Blanket that’s Big Enough

People don’t want to get in over their heads with a mortgage payment they can’t afford.

Recent conversations with First Time Buyers have revealed a refreshing attitude amongst today’s home buyers: affordability. People don’t want to get in over their heads with a mortgage payment they can’t afford. I really like that. I have advocated exactly that concept with my clients for my entire career: buy a home you can afford.

During The Boom my words of advice in this regard fell on deaf ears. I would do then as I do now: calculate the mortgage payment and ask the client if this number fits the family budget. In other words, “Can you afford this?” Too often the answer would be “Yes” when I truly knew it should be a “No.” I tried to tell these folks to buy a cheaper house, buy a home they could afford so as not to lead to trouble down the line. I walked away from many of those situations because I just couldn’t reconcile the math and I wouldn’t be a party to a future financial disaster. I knew full well, as I left the room, that another mortgage “professional” would sit down with those clients and tell them what they wanted to hear, give them a truly bad mortgage, collect his commission check, and march off into the sunset leaving this family with a ticking time bomb.

I sat last night with a young couple shopping for a 2 family home. They make an excellent income and have excellent credit. They’re working with not a whole lot of cash (for New York) and so we’ve qualified them for an FHA Insured mortgage loan. They had an expression, “Use a blanket that’s big enough.” In other words, buy a home you can afford. It’s truly all about the monthly payment. If you can’t reconcile that number with your family’s budget, you’re either not ready to buy, or you should look for a less expensive home.

Even though this couple could afford a pretty hefty mortgage payment based on their income, they insist on shopping for a house that allows for a mortgage payment that leaves “breathing room” in their budget. This is good, sober thinking.

When you buy a home, you’re reaching for the stars to make the dream of homeownership come true. But reaching for the stars doesn’t mean you have to launch yourself into orbit. You can make that dream come true with an affordable mortgage payment if you are honest with yourself and realize that you really need to a “blanket that’s big enough.”

Makes sense to me, a blanket that’s big enough keeps you warm at night.

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading tcurranmortgage.com. Hope that helps!

Mortgage Modification Murder: Homeowner Beware!!!

The lowlife mortgage modification scam artist has committed financial “murder.” The crook has taken not only this homeowner’s hard-earned cash, but caused the loss of a home and a substantial financial asset for the family.

I received a call yesterday at our office from a homeowner in Virginia. He was looking for some kind of FHA mortgage modification company and found us instead in his Google Search. Our company is not licensed in Virginia; neither do we do mortgage modifications. We just do plain old-fashioned mortgage originations, helping people buy homes and doing some refinance work, too.

I spent a few minutes with this gentleman on the phone cautioning him against mortgage modification fraudsters. I told him about the many scams being perpetrated by modification companies seeking to take money from unwitting homeowners while delivering zero satisfaction or assistance. I pointed him instead to the HUD.gov website to seek out a mortgage counsellor who might better assist him with his dilemma. I told him, too, that an attorney was probably his best option.

One of our Loan Officers told us of a man he met who is losing his home to foreclosure. A little over a year ago this man had a perfect mortgage payment history. For whatever reason, he decided he needed to modify his mortgage. He hired one of these mortgage modification murderers and paid thousands of dollars in fees to the fraudster. The crooked scam-artist told the man to stop paying his mortgage; upon the advice of his paid-professional-mortgage-modification-expert, the man did indeed cease paying his mortgage.

There was no modification; no call was ever made the the Lender to negotiate on the homeowner’s behalf. Money was stolen from this man and his family; now they are losing their home to foreclosure. The lowlife scam artist has committed, IMHO, financial “murder.” The crook has taken not only this man’s hard-earned cash, but caused the loss of a home and a substantial financial asset. Disgusting.

Homeowners beware. Too many of you who I speak to or hear of are doing exactly what too many of you did during the boom years: you’re following a dangerous path, ignoring the advice of seasoned professionals, and you’re allowing yourselves to be duped out of your homes the same way many of you allowed yourselves to be duped into bad mortgage loans.

If you feel you need help modifying your mortgage, contact your Lender directly. If at first you don’t succeed, try, try, TRY again. If you don’t have the time for that because you are busy working hard to pay your mortgage and your bills, then hire an attorney. Pay your attorney a retainer fee and let a licensed legal professional work on your behalf. If you don’t have an attorney, get a referral from family or friends, or consult your local bar association. You can find local help here, on the American Bar Association website.

President Obama and Congress have provided Homeowners with an opportunity to refinance or modify as part of the 2009 Stimulus Package. Find United States Government help here: Making Home Affordable.

A list of HUD Approved mortgage counsellors can be found here: Foreclosure Avoidance Counselling

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading tcurranmortgage.com. Hope that helps!

They’re BACK. Mortgage Losers/Thieves/Lowlifes Return To the Industry

All those mortgage losers who put this industry and the economy in the toilet are returning to prey on consumers once again.

We’re seeing it. All those mortgage losers who put this industry and the economy in the toilet are returning to prey on consumers once again. They’re returning because opportunities abound to separate hard-working homeowners and homebuyers from their money.

We’re hearing of people getting back into the mortgage business after the long cold “winter” of 2007-2009 when business was hard to come by and only the brave and the bold stuck it out to continue hard-earned careers. These mortgage-professional-wannabees are coming back because low interest rates and a newfound sense of optimism are bringing buyers back and opening up homeowners’ minds to the idea of refinancing.

The Associated Press reported of a warning from Senator Charles Schumer about these mortgage losers. The Senator it seems is also aware of the return of these crooks looking to ripoff consumers. Read more HERE

More than ever when shopping for a mortgage the words “Buyer Beware” ring true. Look for those mortgage professionals with substantial experience and preferably those who you find through a referral from a friend or family member, or your tax professional or attorney. Searching the internet for a mortgage professional is, IMHO, a recipe for disaster. You’re likely to come across many alleged experts who only want to tell you what you want to hear just to get your business. Once they get you to the closing table, everything changes and you can watch your money evaporate from your wallet.

I’ve recently cautioned against working with non-FHA approved mortgage people. These are yet another class of mortgage lowlife who pretend they are allowed to originate FHA loans. Worse, they pretend to know “all about” FHA loans. I just spoke on the phone while writing this blog entry with a young man who told me how he encountered many such people who claimed they could approve him for an FHA loan on a Co-Op apartment purchase. He told me they all seemed very happy to want to separate him from his money for application fees and the like. He contacted me to ask about getting an FHA loan for a Co-Op. He seemed to know already that such a loan was not available, but thought it’s because FHA doesn’t insure Co-Op loans. In fact, FHA DOES indeed insure Co-Op loans (FHA is an insurance program; FHA doesn’t make the loan, they insure the Lender’s loan in the event of foreclosure). I explained this fact to him. The problem with FHA and Co-Op loans is there are no Lenders who provide such financing.

No conversation about mortgage lowlifes would be complete without a mention of those poor homeowners trying to do a loan modification. As I mentioned recently, there are many scams out there with alleged “loan modification experts” very willing to take thousands of dollars in fees from distressed homeowners while providing absolutely nothing in return: no modification, no saving of the house, nothing, nada, zilch. Many of these crooks are, in my opinion, former mortgage losers who have changed their crime tactics from putting unsuspecting people into terrible sub-prime loans. Now they seek to steal your money—and your home—by pretending to counsel you on modifying your loan. BUYER BEWARE.

If you truly feel you wish to modify your loan contact an attorney. Or do it yourself.

On a sidenote, I attended a job fair yesterday seeking to recruit salespeople for the company where I work. I met the recruiters from the FBI and asked them to please, “…hire more people today and arrest more mortgage brokers.” They laughed and asked what I do. “I’m a mortgage broker!” I replied. “Please, I’m serious,” I continued, “these people have destroyed my industry, please hire some good people today and go out and arrest more mortgage brokers.”

Postscript: To the young man who called for advice on FHA and the Co-Op loan: Thank you for your kind compliment about tcurranmortgage.com and thank you for stopping by to read my rantings!!!

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading tcurranmortgage.com. Hope that helps!

Erica’s Mom is Harrassing Her to Buy A House!

My Mom is harrassing me to buy a house. She keeps telling me I have to get this $8,000 stimulus refund and I have to close this year!

I met with Erica this evening to prequalify her for a mortgage for a 2 family house she wants to buy in the Bronx. I gave my usual “tcurranmortgage” mini-homebuyer-seminar, not knowing when to shut up and stop talking (that’s why Gary set up this blog when he built my website four years ago; he knows me too well!) as usual.

Near to the end of our visit, I mentioned to Erica that Uncle Sam was going to send her a check for $8,000 for buying her first home this year. Erica responded by telling us, “Yes, I know. My Mom is harrassing me to buy a house. She keeps telling me I have to get this $8,000 and I have to close this year!”


YAY to Erica’s Mom! YAY to President Obama and his 2009 Stimulus Package and the $8,000 Refundable Tax Credit!

Just FYI: the tax credit is a truly refundable credit of either $8,000 or 10% of the purchase price of the house (whichever is lower; in NY, that’s going to be the 8k!!!). You don’t have to wait until 2010 to get the cash in your wallet. You can file an amendment to your 2008 tax return and get the money this year. There are restrictions, so be sure to check out the IRS website HERE to verify. You can even download the appropriate filing schedule to bring to your tax professional to file the amendment. Get to it so you can heed Erica’s Mom’s haranguing: GO GET THE MONEY!!!

Thanks Erica for the inspiration for tonight’s blog.

How-To Make An Offer: Redux 2009

Check out my Re-Posted article on making offers and you, too, can get the home you want at the price you want to pay.

I like to share my professional and personal experience with HomeBuyers. To that end, I created this blog four years ago. I’ve written extensively about the experience of buying a first home, especially with regards to negotiating with Sellers.

As the Spring Buying season gets underway (and it is DEFINITELY doing so as witness recent activity within my market), I thought I might Re-Post one of my blog articles about how-to make an offer to buy your first home. There is a definite process to making an offer as you will see in the article. Not only did I present information from the “old-fashioned” way of buying a home through a Realtor, but I seeded the article with much that I had learned as a mortgage professional. In my experience, this is a technique that is tried and true and it WORKS.

When Buyers ask me, “Hey Trevor, how do I get a sense what the Seller’s “real” price is?” I respond: “MAKE AN OFFER!”

When Buyers like a house but realize it needs updating, or, the house location is great for their needs but the house itself isn’t quite right, thus leading in both instances to a desire to pay substantially less than the asking price, I recommend those Buyers, too, use the Offer technique described in my article.

Too often Buyers look at homes they really like but walk away without making an offer. In New York State, until you sign a contract of sale, you can make as many offers on as many houses for whatever prices as you like without being committed to a danged thing. Use the Offering technique to get what YOU want. In today’s Buyer’s market this technique is useful to get unrealistic Sellers shaken loose from the idea that their home is still worth what it was in 2005.

Try it and you’ll find you get results when you are dealing with what I consider to be “serious” Sellers and Realtors. The method also helps you weed out unrealistic Sellers from your search for a home. It’s true, there are Sellers out there who aren’t serious. By using my offer method you discover quickly and avoid wasting your time dealing with them.

Let’s talk about Realtors for a moment. With the market in such disarray, many, many Realtors have departed the real estate business; they could not earn enough to pay their bills. They have moved on to take salaried jobs elsewhere. You would think this cleansing process would leave only serious real estate professionals, those who are earnest in their desire to adhere to professional standards and ethics. Too, you would think the part-time Realtor, the “dabbler” if you will, couldn’t possibly survive. In both cases your thinking would be wrong. I’m sorry to report that I’m still coming across situations where Buyers are working with less-than-professional-Realtors. Unfortunately, this can affect a Buyer because you don’t get the high quality of professionalism that you deserve. In a difficult market where Sellers are unsure of their course of action the results can be disastrous. The Realtor’s role is to bring Buyers and Sellers together. A seasoned professional does so ethically and with quality sales techniques. The Pro doesn’t use sales “mumbo-jumbo” instead adhering to the idea that a good salesperson listens to the needs of the customer/client and finds a way to satisfy those needs. The Seller wants the best price in a “Buyer’s Market” and the Buyer wants the home they love without over-paying. Quality Realtors make that happen.

My experience with many part-time Realtors is they don’t have the resources to find the right home for their Buyer. Neither do they have the time nor the inclination for lengthy negotiations.

Many of those “Boom-Time” Realtors who made a killing selling homes to anyone with a pulse just don’t care to understand the finer points of being a good salesperson. In an attempt to survive they are still using the methods that sold homes four years ago. For example, I had a Realtor tell one of my clients at an open house that he had “…better hurry up and make an offer because there are 3 other really good offers on the table.” WHAT!?! In this market that cannot possibly be true. That’s “Boom-Time” selling, not Buyer’s Market professionalism.

My Buyer tested the waters using my offering technique. The offer was neither accepted nor countered. We do not believe the Realtor even presented the offer to the Seller, a violation of New York State law. My client’s offer was very reasonable considering the market conditions, their seriousness as qualified homebuyers, and the fact the house needed $30,000 of updates. The Buyer used the offering technique to discern if the Seller was serious about selling the home. Clearly the Seller was not, or, as I suspect, the Seller’s Realtor was a substandard salesperson. The house is still on the market a month later. I guess the other “really good offers” just didn’t work out (if they existed at all).

My client, on the other hand, has gone on to find a superb and experienced Realtor after using my offering method to walk away from a good house with a bad situation.

Check out the article and you, too, can get the home you want at the price you want to pay. As I have often said around the internet after posting advice on one forum or another, “Hope that helps!”

The Miracle Rehabilitation Loan known as the FHA 203k Loan

A fundamental look at the miracle program known as FHA 203k.

So many Buyers today are eager to purchase homes at below market prices. Often these homes are in need of serious repairs or improvements to update the property. The 203k Program handily meets the needs of Buyers today. I personally have originated and closed dozens of these loans back
in the early 1990’s in Harlem and Bedford-Stuyvesant under President Clinton’s Inner City Rehabilitation Initiative. Often we were financing a complete gut renovation of an abandoned Single Room Occupancy (SRO) residence. The Buyers usually paid a price around $50,000 and I would find FHA 203k Financing in the range of $250,000 to cover the purchase and the renovations. Under the provisions of the rehabilitation, the Buyer of such an SRO would convert the Certificate of Occupancy from rooming house to legal 2, 3 or even 4 Family home. The 203k allowed for just such a change and the costs involved, including Architectural fees, Plans and Permits, not to mention the construction costs.

Toay this miracle program allows a Buyer to purchase a home and obtain the monies for repairs or home improvements all rolled into a single loan with a SINGLE monthly FIXED RATE payment. The repairs can cost as little as $5,000 or can run as high as necessary to gut-rehab a home. The limit on
the repair monies that can be included in the loan is the Loan-To-Value (LTV) Limit based on statutory FHA Loan Limits in your area (see below). And this LTV percentage is calculated based on the value of the house AFTER improvements.

The 203k program even has a provision allowing the Buyer to request that up to 6 months worth of mortgage payments be included in the loan so they don’t have to pay two monthly housing
expenses—rent and mortgage—while the house is under construction.

With more and more bank-owned “REO” properties offered for sale, Buyers will need the 203k
Program more than ever before.

203k Interest rates run higher than market, usually about 1% higher, but this is still an ideal program to help Buyers achieve their goals of homeownership while simultaneously updating or renovating a home for the lowest possible cost.

Highlights of the 203k Program:

>Buyer can obtain the cash needed to conduct improvements on a home
purchase folded into the same mortgage loan needed to purchase the house.

>Borrower must qualify according to regular FHA Underwriting criteria with regards to Income, Assets and Credit.

>The Program is only open to Owner-Occupants; no investors permitted. BUT you do NOT have to be First-Time Homebuyer.

>No Income Limits; no minimum income requirements. No geographic limitations, with the exception that the property is here in the good ol’ USA!

Purchase + Improvements = ONE Mortgage and ONE Monthly Payment

Current FHA LOAN LIMITS under the 2009 Stimulus Bill for the New York Metropolitan Region:

1Fam: $729,750

2Fam: $934,200

3Fam: $1,129,250

4Fam: $1,403,400

FHA Basics:

* No Reserves on 1 and 2 Family homes (but it helps!)
* 3 Months Reserves required on 3 and 4 Family homes
* 3.5% Downpayment
* 6% Seller’s Concession
* Credit Scores down to 620 (down to 580 with some Lenders)

There you have a good fundamental look at the miracle program known as FHA 203k.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

FHA Is Good For New York

Given the high hurdles for potential purchasers to overcome with regards to credit and cash in the New York Metro Region, the FHA program eases the path to homeownership.

The FHA is the Federal Housing Administration, a division of the United States Department of Housing and Urban Development (HUD). The FHA has been one of the single best ways for homebuyers to purchase a home since its inception in 1934 under FDR’s New Deal.

FHA guidelines make the experience of homeownership more accessible to more people. The guidelines are designed in such a way as to provide Lenders with more flexibility. The FHA is an insurance program whereby the mortgage loan is insured by the United States government. Further, FHA is the only Federal agency that is totally self-funded; FHA does not take any taxpayer money!

Some of the many wonderful features of FHA Insured mortgage loans:

-Low downpayment requirements: 3.5% of the purchase price

-Purchaser’s can use more of their monthly income to qualify for a loan

-Downpayment can be 100% gifted by a family member or employer

-Credit score requirements are lower than for Conventional loans

-FHA Loans are fully assumable (subject to the new purchaser’s ability to qualify for the loan)

-A Seller can contribute up to 6% of a Purchaser’s closing costs. This is especially useful in the NY Metro region where closing costs average 6%. This allows a potential Purchaser to own a home with a substantially lower cash requirement than Conventional loans. (See Closing Costs In NY for more information about closing costs in NY)

1. Cash requirements lower: If a Purchaser obtains conventional financing with a 5% downpayment, the total cash required on a $475,000 Single Family purchase would be approximately $60,000 (downpayment, closing costs and 2 months PITI reserves). The same Purchaser using an FHA loan would need approximately $20,000 (3.5% downpayment; Seller can pay the Purchaser’s closing costs and no reserves are required).
2. FHA allows for a higher “Debt-To-Income” ratio. Also, FHA allows on a single family or condo that the Purchaser can have Non-Occupying cosignors from the Purchaser’s family assist in qualifying for the mortgage loan.
3. Credit scores lower: FHA does not have a credit score requirement. However, Lenders are permitted to overlay their own Underwriting criteria on FHA guidelines. Currently the credit score standard among most Lenders for an FHA loan is a minimum credit score of 620 (some Lenders go down to 580). For a Conventional loan with PMI (Private Mortgage Insurance) a Purchaser need have at least a 720 credit score.
4. Expanded Opportunity to Purchase: On any given day there are many people wishing to purchase a home who don’t have the money for a large downpayment PLUS closing costs. Living in New York is expensive. For the average New York family earning approximately $100,000 annually to save $60,000 is an extremely difficult undertaking considering the high housing expense and other high cost of living expenses. Saving a $20,000 downpayment is an easier exercise thus making the dream of homeownership more accessible.
5. After Purchase Marketability: The FHA Purchaser in today’s market is effectively locking in today’s interest rate for a future homebuyer in the resale of the home. For example, if a Purchaser of a Single Family home closed today at a 30year fixed rate of 5.375%, that purchaser/owner could conceivably resell the home seven years from now to a person who would assume the FHA loan at today’s rate. If rates are higher in the future, this makes for a more opportune marketing potential.

In conclusion, the FHA program surprises potential homebuyers with its accessibility. These are people who never thought they could own a home. Specifically to the New York market, given the high hurdles for potential purchasers to overcome with regards to credit and cash, the FHA program eases the path to homeownership.

More about FHA and where to find an approved FHA Lending Institution at The FHA Website.