Almost anybody can get an FHA loan. There are no income limits like you may find with other first-time buyer programs. However, there are limits on how much you can borrow. In general, you’re limited to relatively small mortgage loans relative to home prices in your area. To find the limits in your region, visit HUD's Website.
To qualify for an FHA loan, you’ll need to have reasonable debt to income ratio. In general, you have to be better than 29/41. In addition, you have to have decent credit. You don’t need wonderful credit to get an FHA loan, it just needs to be decent.
FHA loans are not for everybody. Nevertheless, they are a great help to some borrowers. FHA loans allow people to buy a home with a down payment as small as 3%. Other loans might not allow such a low down payment.
FHA loans offer a few other bells and whistles:
The FHA promises to pay lenders if a borrower defaults on an FHA loan. To fund this obligation, the FHA charges borrowers a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium (MIP) of 1.5%. They also pay a small ongoing fee with each monthly payment.
If a borrower defaults on an FHA loan, the FHA uses collected insurance premiums to pay off the mortgage.
You may find that FHA loans are not for you. An FHA loan may not offer enough money if you need a large mortgage. In addition, the upfront mortgage insurance premium (and ongoing premiums) can cost more than private mortgage insurance.
In many cases, you can still buy a house with a very little down using a standard loan (not an FHA loan). In particular, home buyers with good credit can find competitive offers that beat FHA loans.
As always, you should compare offers for FHA loans against other offers.
This is a question that comes up quite frequently with my buyer clients. It’s a tough question to answer. I guess it depends on a few variables. First, if the property just came on the market and is aggressively priced compared to the competition, and when you went to the open house it was bombarded with people. In a situation like this I would say it’s a good possibility that there will be offers coming in. Second, a property that has been on the market for a while all of a sudden has a drastic price reduction, I could also see the possibility of an offer coming in. However, if the property has been sitting on the market and hasn't really moved in price I would be a bit weary, especially if the listing broker is claiming that time is of the essence and if you make an offer now they will present it to the seller before others come in. This is where a good buyer’s agent comes into the picture. Although it is hard to say for sure if the listing agent is being sincere or just trying to get the deal, but an experienced buyers agent should be able to weigh the variables and consult their buyers accordingly. Not to mention, if you have been in the industry long enough you start to know who to look out for!!!
For
you to understand how much to offer for a home you’re interested in, it’s
important for you to know how sellers price their homes. Here are 4 common
strategies you’ll start to recognize when you begin to view homes:
1. Clearly Overpriced:
Every seller wants to realize the most amount of money they can for their home,
and real estate agents know this. If more than one agent is competing for your
listing, an easy way to win the battle is to over inflate the value of your
home.
2. Somewhat Overpriced:
About 3/4 of the homes on the market are 5-10% overpriced.
3.
Some sellers understand that real estate is part of the capitalistic system of
supply and demand and will carefully and realistically price their homes based
on a thorough analysis of other homes on the market.
4.
Some sellers are motivated by a quick sale.
Furthermore, residential construction is close to
15-year lows at 3.8% of GDP; by the fourth quarter of this year, it
will probably hit the lowest level ever. So what's going to stop the
housing decline? Very simply, the same thing that caused the bust:
affordability.
Mr. Arends points out that Bill Wheaton, a legendary real-estate professor at the Massachusetts Institute of Technology, has also suggested that fears about the real-estate crash were overdone. And he points to a private portfolio manager in London, who said the homebuilding stocks on Wall Street were at last a “buy.”
More at: The Wall Street Journal




