atlanta real estateThe FHA loan program is playing a vital role in the Atlanta real estate market today. Leveling the playing field, more low-to-middle income families are obtaining their dream homes through this government-backed program.

    How?

    The FHA guarantees the loan in the event a borrower defaults. Lenders are more likely to give out the loan with such a guarantee.

    In addition, these loans have a lower down payment than conventional loans. With a down payment as low as 3.5 to 5 percent, it’s easier to obtain the needed funds for a new home. Families can even use money given to the buyers as a gift for the down payment. The closing costs are low, there are no income limits, and the credit and debt-to-income ratios are not as strict as most loan programs. So, it’s now possible for almost anyone to work towards his or her goal of buying a home.

    Obtaining the Georgia FHA loan

    In order to qualify for the loan, potential buyers need to gather a great deal of paperwork.

    • A listing of past and current addresses.
    • Employers’ names and addresses for the last two years.
    • The amount of monthly grossed salary
    • W2s for the past two years
    • Income tax returns for the last two years

    Note that if one is a veteran, he or she will be required to submit a DD Form 214 or an official Armed Forces discharge paperwork and the FHA loan application.

    In addition, a potential homebuyer will need to start working on his or her credit. But do not despair. Working towards the FHA loan credit standards will be easier than trying to meet the expectations of a conventional loan. A reasonable debt to income ratio will be desired. A family will be expected to exhibit the ability to handle past and future debt.

    The Cons

    The FHA loan is not for everyone. People with great credit might be able to get better rates with other loan programs. Also, how much one receives on the FHA loan is restricted to the location of the home. And, as of April 5, 2010, the upfront mortgage insurance payment (UFMIP) was raised from 1.50 percent to 2.25 percent of the loan amount.

    So, sit down with a loan counselor today to look over different options and create a plan for owning a home.

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