FHA Loans

Lentegra was recently approved by the Federal Housing Administration to originate FHA-insured Loans. For certain borrowers, such as those who would otherwise be considering a subprime loan, FHA loans offer some advantages, such as:

· May Be Easier to Qualify and Cost Less
· Less than Perfect Credit OK
· Low (3%) Downpayment
· Slower Foreclosure Process

The FHA loan is a stable product with some nice features. However, with all the other financing choices available today, the FHA loan as it currently stands is rarely the best choice and there are some serious disadvantages of the program, including lower loan limits (approximately $50k less than conventional loans for a single family) and the fact that there is any downpayment required at all when other loan programs today allow up to 100% financing.

Another aspect to FHA loans is that they are way more complicated to process than standard FannieMae/FreddieMac loans, with more paperwork and more stringent requirements (e.g., must use an FHA approved appraiser, complete termite inspection required, etc.). They’re a bear.

The Expanding American Homeownership Act of 2006 , a bill currently before Congress intended to make the FHA loan more competitive, has been getting some positive press. It’ll be interesting to see what comes of it.

In the meantime, for those of you for whom an FHA is the right solution, I can do them now!