WASHINGTON, D.C. –  The FHA loan, long-considered an economical option for first time homebuyers, recently underwent an overhaul to make it a more attractive option for consumers.  <br/><br/>The Federal Housing Administration (FHA) loan has always been known for it’s low down payment option – in many cases buyers only need three percent of the purchase price and military personnel can pay as little as 2.25 percent. Some of that cash requirement can be applied to closing costs.  However, FHA had its fair share of burdensome requirements. <br/><br/>“It wasn’t uncommon for an FHA loan to be held up because an inspector found a cosmetic flaw in a house,” said John Councilman CMC, CRMS, Chair of NAMB’s FHA Committee. “This all changed when HUD recently adjusted some of its requirements for the loan.”<br/><br/>This past December, the Administration waived the requirement to fix cosmetic flaws. In addition to this new rule, FHA also made it easier for consumers to negotiate payment for common mortgage costs. <br/><br/>Previously, the seller had to pay for all non-allowable expenses. This would include items like the processing, document preparation, inspection, photo, tax service and underwriting fees. <br/><br/>With the exception of the tax service fee, these costs can now be paid for by the buyer, adding more flexibility in the mortgage process. <br/><br/>Councilman said the Administration also streamlined some of the cumbersome technical requirements for the loan. Termite, well and septic inspections are no longer required unless there is evidence of a problem.  He said all of these changes combined should make the loan a more attractive option.  <br/><br/>He noted the many advantages of the FHA Loan:<br/><br/>Veterans who have their Certificate of Eligibility tied up or who only have partial eligibility can go to FHA and get slightly lower down payment terms (2.25% versus the normal 3%) <br/>Consumers can take a high-rate sub-prime loan and refinance it as an FHA loan <br/>Borrowers are able to take 95% cash out of their residence at a low interest rate <br/>FHA mortgage insurance is much cheaper than private mortgage insurance. In many cases this can make a difference of more than $200 a month in monthly expenses <br/>Most FHA loans allow the seller to contribute 6% to borrower (traditional loans only allow 3%); this can make a big difference in high-cost areas <br/>Borrowers can also tap into community gift programs and non-profits for down-payment costs, which means they could get an FHA loan even if they don’t have any funds themselves <br/>FHA and VA remain virtually the only options for manufactured housing with a low down-payment and low interest rate<br/>FHA loans generally range from $200,160  in low cost areas up to $362,790 in areas such as Washington, DC or California. According to www.fha.com, potential borrowers need:<br/><br/>Steady employment history, at least two years with the same employer. <br/>Consistent or increasing income over the past two years. <br/>Credit report should be in good standing with less than two 30-day late payments in the past two years. <br/>Any bankruptcy on record must be at least two years old with good credit for the two consecutive years. <br/>Any foreclosure must be at least three years old with good credit for the past three years. <br/>Mortgage payment qualified for should be approximately 30 percent or less of your total monthly gross income. <br/>(However, compensating factors allow many of the above requirements to be liberalized.)<br/><br/>Recent Regulatory Changes Take Some of the Hassles Out of the FHA Mortgage<br/>Wednesday, March 01, 2006 - National Association of Mortgage Brokers<br/><br/><a href='http://www.estreetloans.com/cgi-bin/teemz.cgi?board=_master&action=opentopic&topic=1&forum=FHA_Loans_'>Discuss this article in our Discussion Groups</a><br/><a href='http://www.estreetloans.com/request.jsp'>Request a Home Loan Today - Click Here Now</a><br/>