10 Great Reasons to Apply for an FHA Loan in NH Roger Odoardi There’s nothing quite so exciting as buying a home. It’s an experience primed for possibility: Your home will be the place where you welcome family and friends, celebrate major achievements, mark milestones and make happy memories. The FHA loan program in NH has helped many people achieve their dream of home ownership and embark on a new life adventure. An FHA loan, also known as a 203(b) mortgage, is issued by federally approved lenders and insured by the Federal Housing Administration. The FHA program was founded during the Great Depression to help stabilize the housing industry and has been popular with homebuyers ever since. There are a few basic requirements for FHA loan eligibility in NH, including: A valid Social Security number Lawful residency in the United States A steady history of employment or of having worked for the same employer for at least two years The ability to sustain monthly payments A clean credit history over the previous two years Approval of the property from an FHA-approved appraiser The NH FHA Preapproval Process Your mortgage loan officer can help you with the FHA preapproval process, which takes about one business day. Here are the steps we recommend taking to prepare: Make sure that you have the minimum down payment amount (at least 3.5%) Check your (and other co-signers’) credit score Gather copies of recent paystubs and your tax documents from the past two months Reach out to a trusted FHA lender Top 10 Reasons to Apply for an FHA Loan in NH Are you looking to purchase property in the Granite State, but aren’t sure which loan option is right for you? Here are 10 good reasons why you should consider applying for an FHA loan in NH. Get a lower down payment. Since FHA loans were created with low-income buyers in mind, the down payment on an FHA loan could be as low as 3.5% of the purchase price of the home. FHA loans are forgiving of high debt-to-income ratios. Lenders use your debt-to-income ratio (the amount of debt you have relative to your overall income) to evaluate your ability to manage payments. Compared to a conventional loan, which allows a maximum DTI of 43%, an FHA loan allows a maximum DTI of 45% — though, in some cases, it can be as high as 50%. FHA loans are also forgiving on low or nontraditional credit scores. If your credit score is under 700, you might be a good candidate for an FHA loan. Borrowers with a credit score of 580 to 700 qualify for the low down payment advantage; those with a credit score between 500 and 579 are still eligible for an FHA loan, but are required to make a larger down payment (typically 10%). Even borrowers with a non-traditional or insufficient credit history are still eligible for an FHA loan — lenders evaluate these applicants on a case-by-case basis. Receive financial hardship relief. Loan services sometimes offer relief for FHA borrowers struggling to make payments by allowing a temporary period of forbearance, modifying loans to lower the interest rate, extending the payback period or deferring the loan balance at no interest. Save money on closing costs. Since FHA loans are standardized, the seller can offer to pay up to 6% of closing costs to attract potential buyers. Use “gifts” toward down payment and closing costs. Even if your down payment is only 3.5%, that can still be a major expense. Fortunately, the FHA program allows buyers to use a monetary gift from a family member, a fiancé or domestic partner, or a friend (provided the relationship is clearly defined) to cover their down payment cost. Borrow money for home repairs. Home repair and refurbishment can easily cost upwards of thousands of dollars. A Low Down Payment Government Rehab Loan, also known as a 203(k) loan, is a type of FHA loan that enables homeowners to borrow the funds needed for their project. An FHA 203(k) loan is not based on the home’s current value, but on its projected value after repair. There’s no prepayment penalty. A prepayment penalty is a clause in a mortgage contract that stipulates that the homeowner will be charged a penalty if they pay off all or part of the mortgage early. Unlike conventional loans, FHA loans are not subject to prepayment penalties or other similar, unnecessary fees. FHA loans are assumable. A seller who previously financed their home with an FHA-insured loan has the option to offer you the right to assume their loan. If you choose to assume the loan, you inherit the obligations of the mortgage upon the sale of the property. The benefit to this is that, if the seller has a mortgage rate below the market rate, you can get financing at a lower interest rate than what lenders currently charge. Streamline refinancing. Homeowners can put their hard-earned equity to work and reduce their monthly payments with FHA refinancing. FHA loans are easy to refinance because they do not require a property appraisal and require limited credit or income documentation and limited employment documentation to qualify. As with all loans, homeowners are encouraged to carefully consider their options before refinancing. Contact us today to start your application for an FHA loan in NH. We know it’s a big and exciting step and are available to support you throughout your homebuying journey. Although the FHA loan program is very popular with first time homebuyers, you don’t need to be a first time buyer to be eligible for an FHA loan — anyone can apply for an FHA loan provided they meet the standard underwriting requirements. What to Look for in an Ideal FHA Mortgage Company It’s important to trust your FHA lender as they will be an important part of your homebuying process. An ideal FHA lender is a good communicator and client advocate. They should be able to offer competitive rates and fees. Additionally, an FHA lender should: Allow for credit scores as low as 500 Provide FHA 203k loans If you’re unsure whether you qualify for an FHA loan, don’t delay — speak with an experienced mortgage broker today to start your journey toward homeownership. The team at Blue Water Mortgage has the skills and experience necessary to help you evaluate all your options and find the plan that best suits your unique needs. FAQs about FHA Loans in NH Q: Do I have to be a first time homeowner to apply for an FHA loan? A: No, although the FHA loan program is popular with first time homebuyers, you don’t need to be a first time buyer to be eligible to apply. Q: Can I get an FHA loan for a multifamily home? A: Yes. You can qualify for an FHA loan to purchase up to a 4-family home, as long as one of the units is your primary residence. Q: What is a mortgage broker and how can they help me get an FHA loan in New Hampshire? A: A mortgage broker acts as an intermediary between the borrower and the lender. A good broker will review your finances to determine which lender best fits your individual situation, then represent you throughout the loan application process to ensure you get the best terms. Disclaimer: Blue Water Mortgage is not directly endorsed by the FHA nor are we affiliated with the FHA. Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.