FHA INSURED MORTGAGE LOANS FOR MONTGOMERY
COUNTY HOME BUYERS

Q. How does the FHA insured mortgage loan help Montgomery County home buyers?

A. The FHA insured mortgage loan ("FHA Loan") benefits home buyers by permitting them to finance part of their closing costs by requiring a lower down payment than conventional loans with similar interest rates and features.

Q. Is the FHA Loan limited for first time home buyers in Montgomery County?

A. No. The FHA Loan is available to any Montgomery County home buyer. However, you can have only one at a time. Also, for non-United States citizens, the applicant must have United States employment, Social Security number and some credit history.

Q. Can I buy the same amount of house in Montgomery County with an FHA Loan?

A. Yes. In fact, the FHA Loan permits higher debt to income ratios than conventional loans, thereby allowing home buyers in Montgomery County home buyers to qualify for a higher purchase price than with a conventional home loan in Maryland.

Q. What is FHA Mortgage Insurance?

A. FHA insurance protects the lender if the home owner defaults and the property goes to foreclosure. Since the FHA insurance is paid through Mortgage Insurance Premiums included in their house payments, funds are available to pay off defaulted loans. Some type of insurance is required on ALL mortgage loans when the home buyers has less than 20% cash down. FHA insurance is a good buy when compared to conventional Private Mortgage Insurance ("PMI"). The cost of FHA mortgage insurance is the same no matter how much the down payment.

Q. Can I use an FHA Loan to pay for rehabilitation of my property?

A. Yes, the FHA 203k loan is a wonderful loan that permits home buyers to buy properties in need of repair, at least $5000 in cost, and benefit from the higher value of the home when the repairs are finished. Once the contract is signed to purchase the home, FHA will provide an "advisor" to the home buyers to help them estimate, contract, and settle the loan. There are many older homes in Montgomery County that would be wonderful homes if purchased and rehabilitated through the FHA 203k loan program.

Q. Can I buy any home with an FHA Loan?

A. Almost. Some Condominium or Town Home communities are not eligible because of a large number of rental properties in the community. Most home will qualify and your lender will be able to verify your choice of home as FHA eligible.

Q. Do I need perfect credit to get an FHA Loan?

A. Persons considering buying a home should make sure that their credit report is accurate and showing no defaults, charge offs, or late payments BEFORE making a loan application. While FHA Loans are more liberal with respect to credit reports, home buyers will not be able to obtain any type of mortgage loan at a reasonable interest rate with outstanding balances in arrears on their credit report.

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