Panama City Real Estate

FHA Loan Information

Panama City Real Estate | FHA FAQ and Information

FHA lending limits as of February 25, 2009

Panama City-Lynn Haven, FL (MSA)
One-Family - $271,050 Two-Family - $507,250 Three-Family - $613,150 Four-Family - $762,000

Florida Assist Program Income Limits - Bay County

Number of Persons in Household

  • One-Person - $39,300.00
  • Two-Persons - $45,000.00
  • Three-Persons - $50,600.00
  • Four-Persons - $56,200.00
  • Five-Persons - $60,700.00
  • Six-Persons - $65,200.00
  • Seven-Persons - $69,700.00
  • Eight-Persons - $74,200.00

To check the current FHA financing limits, please visit the HUD gov website.

FHA Refinance and Mortgage Fact #1

About the FHA

The Federal Housing Administration (FHA), an agency of the federal government, insures private loans that are issued for new and existing housing, and loans that are approved for home repairs. Created by congress in 1934, the FHA became part of the Department of Housing and Urban Development's Office of Housing (HUD) in 1965. Today the mission of the FHA includes helping borrowers get amounts they qualify for, and assisting lenders by reducing their risk in issuing loans. To find out if you might be eligible for an FHA-insured loan, contact us.

FHA Refinance and Mortgage Fact #2

Credit Problems and a HUD Housing Loan

It is advisable to approach any FHA loan with your best possible credit rating. If you have had credit problems in the past, the FHA recommends a Consumer Credit Counseling program to avoid being denied an FHA loan. A good credit counselor can talk to you about income-to-debt ratio, maintaining satisfactory payments and challenging errors on your credit report. The FHA recommends creating a satisfactory payment history for at least one year before applying for any FHA loan program.

FHA Refinance and Mortgage Fact #3

The FHA TOTAL Scorecard

If you submit FHA paperwork electronically, the FHA TOTAL Scorecard is used to measure the credit risk of all FHA loans submitted through the automatic underwriting system. Your FHA loan is processed through a qualified and approved FHA lender. Applications submitted through FHA TOTAL are evaluated by a standardized scoring procedure creating a quick, fair and seamless evaluation. The FHA's TOTAL system is internet based and works in real time.

FHA Refinance and Mortgage Fact #4

Applying for an FHA Loan

The FHA asks for a lot of information on your FHA loan application. You will need to provide the FHA with a wide range of details including:

  1. All addresses where you have lived in the previous two years.
  2. Your employer's name and addresses for the last two years, plus the amount of your Gross Monthly Salary.
  3. W2s for the past two years.
  4. Income tax forms submitted for the last two years.

Gather all of this before you begin your FHA application so you will have everything handy to complete your FHA loan forms at one time.

FHA Refinance and Mortgage Fact #5

Additional Paperwork for Veterans

The FHA asks that veterans submit the DD Form 214 along with their FHA loan application paperwork. The DD Form 214 is the official record of discharge from the Armed Forces. If you have recently separated, retired or otherwise left active duty and don't have your DD Form 214, request a copy from either your final outprocessing base (call the orderly room, records office or outbound assignments/outprocessing office), or request the form electronically from the Department of Defense.

FHA Refinance and Mortgage Fact #6

FHA/HUD Insured Mortgages and Refunds

If you have an FHA loan or HUD insured mortgage, you may have paid an "up-front" mortgage insurance premium at the closing of your house. Assuming you did not default on your mortgage payments, you may be eligible for a refund on part of your insurance premium. Loans granted after September 1, 1983 may be entitled to this refund. Check your FHA loan settlement paperwork or phone your lender to learn more. If you need further assistance, contact your FHA loan officer for help.

FHA Refinance and Mortgage Fact #7

Popular FHA Loans

The 203(b) FHA Fixed Rate Mortgage Loan Program is the widely used FHA home loan, especially among first time home buyers. The 203(b) FHA loan keeps your down payment to a minimum. Your closing costs may also be reduced. The 203(b) FHA loan will finance up to ninety-seven percent of your loan. You must qualify with some debt-to-income ratios, but the 203(b) does not have a minimum income requirement. Check with a financial planner about your debt to income ratio, or discuss your financial status with a lender. Find out how to maximize your credit rating before you apply for your FHA loan.

FHA Refinance and Mortgage Fact #8

Where FHA Mortgages Come From

FHA loans do not come directly from the FHA. The FHA guarantees home loans, reducing the risk to lenders and offering increased borrowing power to qualified applicants. You may bet better interest rates thanks to FHA home loan insurance. FHA loans are particularly helpful for who want a home, but have little or no money saved for a down payment; including those just graduating college, newly married couples, and also those who have had credit problems in the past because of foreclosure or bankruptcy. Check out your credit rating and get a list of lending limits for FHA loans in your area which vary from state to state, and may even vary by county.

FHA Refinance and Mortgage Fact #9

Pre-qualify for an FHA Home Loan

To pre-qualify for an FHA loan, you should be able to demonstrate employability, job stability and reliability. To the FHA, reliability includes holding a steady job for at least two years with the same company or employer and increasing or at least maintaining consistent income. The FHA would like to see that any foreclosures or bankruptcies on your record are at least three years old. The FHA loan bottom line: demonstrate that you have been a good credit risk for two years or more and you will have a much better chance at pre-qualifying for an FHA loan.

FHA Refinance and Mortgage Fact #10

The Increased FHA Loan Amount

In early 2006, a HUD press release announced an increase of nearly thirty thousand dollars in FHA-insured home loan money being made available to borrowers for single-family home mortgages. This increase signals more borrowing power with your FHA home loan, and it allows more people than ever the opportunity to own a home. With only a three-percent down payment and a single-family home mortgage limits coming closer to two hundred thousand dollars, now may be the best time to apply for an FHA home loan. First, evaluate your finances; your monthly housing costs should not exceed more than 29% of your gross monthly income. Use gross income, not net income, when evaluating your finances to apply for your FHA loan.

FHA Refinance and Mortgage Fact #11

FHA Mortgage Fees

"Reasonable and customary" mortgage loan fees can include appraisals, inspections, credit reports, document preparation fees and more. Ask your lender for a list of known fees due with your type of FHA-insured home loan, FHA streamline refinance or other FHA transaction. Have a list of the fees you are expected to pay, when they are due, and determine how they affects the bottom line of your loan.

FHA Refinance and Mortgage Fact #12

Additional FHA Fees

Some of these include courier fees, wire fees, real estate broker fees, recording fees and recording taxes. Depending on your FHA loan, you may be eligible to get state or local assistance for some or all costs related to home buying. Ask your lender what programs are available to you in your state for additional financing, grants or 'forgivable' loans. There can be a great deal of financial help at your local level when seeking an FHA mortgage.

FHA Refinance and Mortgage Fact #13

Fees Prohibited by HUD

Your FHA mortgage is designed to get you into a home for a fair price; you should not pay above and beyond the normal fees associated with buying a home. Certain payments, fees and other charges are illegal. If you are seeking an FHA loan, do not pay any 'unearned fees'. FHA guidelines as well as federal, state and local laws offer regulation against these kinds of illegal fees. If you feel you are being asked to pay a prohibited fee, check with the FHA, contact a housing counselor immediately, or consult a lawyer with expertise in home lending.

FHA Refinance and Mortgage Fact #14

FHA Loan Mistakes to Avoid

One major mistake potential homebuyers can make when applying for an FHA home loan is to make a major credit purchase. Don't cloud your debt-to-income ratio with a big purchase before applying for your FHA insured home loan. Your debt-to-income calculation is based on your current debts and the percentage of that debt against your income. Major credit purchases will seriously alter that ratio, sometimes enough to weigh against you for your FHA loan. If you can afford to pay off any outstanding loans such as auto loans before applying for your FHA loan, that can be a good decision. Don't put yourself at a financial disadvantage to do so but if you are able, eliminating debt will help when you apply for your FHA loan. Consult a financial planner or ask your lender for advice.

FHA Refinance and Mortgage Fact #15

Improving Your Credit Score

Your FHA loan approval depends on your good credit.

  • If you have a poor credit rating, work to establish payment reliability over a period of at least one year before starting your FHA loan paperwork.
  • Try paying down and closing one or two credit cards, which can improve your credit rating by showing you have less potential debt open to you through credit cards.
  • If you have erroneous items on your credit rating, challenge them in writing with the major credit reporting agencies and resolve them before you begin work on the FHA mortgage.

FHA Refinance and Mortgage Fact #16

FHA Mortgage Insurance

FHA mortgage insurance protects lenders in case of a default by the borrower of the FHA loan. An FHA mortgage helps reduces the cash needed to purchase a home. The FHA is funded solely from the income it creates: from the revenue generated by FHA mortgage insurance. This FHA mortgage insurance cost is borne by the homebuyer, but it ends approximately five years later or when the FHA mortgage balance is seventy-eight percent of the property value, whichever occurs last.

FHA mortgages have flexible payment schedules and more inclusive definitions of monthly income, allowing more borrowers to thus qualify for an FHA loan. Ask your lender to do a side-by-side comparison between the FHA mortgage and the current non-FHA versions. It will soon become apparent which is the best value for your money, especially if you don't have a lot to invest in a down payment.

FHA Refinance and Mortgage Fact #17

Streamline a HUD Loan

Streamlining your FHA mortgage is particular kind of FHA loan refinancing plan. To qualify, your FHA mortgage must meet certain requirements:

  • Your FHA mortgage must not be delinquent.
  • Your FHA mortgage must also be currently insured by the FHA.
  • Your FHA Streamline Refinance must lower your payments and monthly principal.

Streamlining refers to a reduction in the amount of paperwork needed to accomplish the refinancing. Some lenders advertise "no cost" FHA mortgage streamlining, but you will incur a higher interest rate than if you paid the closing costs up front.

FHA Refinance and Mortgage Fact #18

Active Duty Military and the FHA Loan

The Service Members Civil Relief Act passed in the 1940s allows active military people to qualify for an interest rate reduction to a maximum of six percent per year during active duty service. This applies both to commercial FHA mortgages. You must actively request this reduced rate and you may also be required to renew your request at periodic intervals as stated in the Civil Relief Act.

FHA Refinance and Mortgage Fact #19

Falling Behind on FHA Loan Payments

In most circumstances, falling behind on your FHA mortgage requires quick action. Never ignore it. Always act immediately to avoid foreclosure. A housing counselor can support you and show you how to maintain your FHA loan payments.

Under certain special circumstances, your FHA mortgage may be protected from foreclosure for ninety days after the payment due date. These special circumstances include a reduction or loss of income from natural disasters and other events if your home is in an area declared by the President as a natural disaster area.

Those who are current on their FHA mortgage payments should continue to pay if possible. But if your income was reduced because of an injury related to the natural disaster, contact your FHA loan officer right away. You may have more support than you realize with your FHA loan.

FHA Refinance and Mortgage Fact #20

FHA Insurance Fund

Some FHA mortgage holders may qualify for help in the form of a one-time payment from the FHA insurance fund, to help bring your FHA mortgage up to date. Requirements to qualify for this FHA support include a mortgage loan that is at least 4 months, but no more than one-year delinquent, and you can are able to begin making full payments once again.

You will need to sign a Promissory Note and have a Lien on your home until the Promissory Note is fully paid off. Remember that this is a one-time only FHA offer. Protect your credit rating for future FHA loans, FHA mortgages or FHA refinancing packages by maintaining good credit.

FHA Refinance and Mortgage Fact #21

FHA Connection

The FHA Connection is an online system that allows authorized lenders and FHA business partners to access FHA computer systems to originate loans. FHA Connection is a very important tool in the FHA loan process and there is no charge to use the service, only the username and password requirements. Using FHA Connection, lenders can begin a new FHA loan, update existing FHA loan applications in the system, and complete FHA loan insurance applications. These are just a few of the many functions available.

FHA Refinance and Mortgage Fact #22

FHA Connection Neighborhood Watch

The FHA Connection Neighborhood Watch allows authorized users to monitor FHA mortgage delinquency patterns in a geographic area, by lender or by loan details. FHA loans that go delinquent after ninety days within the first three years are trackable. FHA Connection Neighborhood watch lets authorized users generate reports that identify problems and unusual patterns of behavior in FHA insured single-family loans. This can help identify existing as well as potential problems with FHA loans.

FHA Refinance and Mortgage Fact #23

FHA Adjustable Rate Mortgage

The FHA Adjustable Rate Mortgage (ARM) offers a flexible interest rate and requires you to be more informed. When shopping for an FHA home, the FHA adjustable rate loan for your FHA home means you should do some homework about the index, which is the measurement of how the interest rate changes. Your lender uses this index to determine interest rate flexibility.

Ask your lender to explain the index in detail and how it works. With the adjustable rate mortgage on your FHA home, you can't predict when or how much the interest rate may change. Ask how much the index for your potential adjustable rate FHA home mortgage has changed recently, and where the information is reported.

FHA Refinance and Mortgage Fact #24

How Mortgage Limits are Set

The FHA does set limits on FHA mortgage loans, and these lending limits may differ by county and state. FHA mortgage loan limits are based upon the Fannie Mae/Freddie Mac limits on conventional mortgage loans. They are also set according to type of home-single family, plus two, three and four family dwellings. If you find that FHA mortgage loan limits in a nearby county are more lenient, you may wish to consider buying a home in the area with the higher limit. If you live on the edge of two counties, find out which one offers the best FHA loan limits before making your home purchase.

THESE ARE THE BAY COUNTY LOAN LIMITS (may change at any time):

DUPLEX            $507,250
TRI-PLEX        $613,150
FOUR-PLEX        $762,000


FHA Refinance and Mortgage Fact #25

FHA Loan Limit

In high-cost areas, the FHA loan limit can be as high as a little over two hundred and ninety thousand dollars. In low-cost areas, the FHA loan limit can be around a little over one hundred and sixty thousand dollars. FHA loan limits can change based on factors including average area home prices. FHA loan limits also increase with the number of units. A multi-unit home will qualify for a higher rate, but those FHA loan limits are subject to the same factors as single unit homes.

FHA Refinance and Mortgage Fact #26

FHA Loan Options

FHA home mortgages can include FHA loans for a 'fixer-upper" home. The FHA loan for fixer-upper property combines the purchase price of the house and the cost of repairs. There are also FHA loans available for qualified borrowers over the age of sixty-two, to convert a portion of the equity in a home into cash.
There are FHA loans available for mobile homes and manufactured homes. In addition to the other types of FHA loan guidelines that pertain to specific types of purchases, there is also the FHA Energy Efficient Mortgage, also known as EEM, providing mortgage insurance to buy or refinance a residence and include the cost of energy-saving upgrades.
For an FHA Energy Efficient Mortgage, the borrower isn't required to qualify for the extra money needed to include the energy upgrades, and there is no down payment required for the extra amount. Anyone concerned about the environment, saving money or just getting the most efficient home they can afford should seriously consider the FHA EEM

FHA Refinance and Mortgage Fact #27

Energy Efficient HUD Mortgage

The FHA EEM allows you to borrow additional money to incorporate energy saving features into your new home. To qualify for the FHA EEM, you'll need to meet some FHA loan guidelines. These include being eligible for the maximum FHA-insured financing available. Your energy improvements must be cost effective, meaning according to FHA guidelines, the cost of the improvements must be less than the total value of the energy savings over the life of the energy-saving equipment or materials. An FHA EEM loan may take some extra homework on your part, but the savings could be well worth the effort

Confused by all the Real Estate Jargon and Terms?  If there is a term you are not familiar with, you can research the terms in my glossary.

Contact me directly 850-774-6582, if you need any assistance with this very important step in the home buying process.

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Panama City Beach Realty Group
Counts Real Estate Group, Inc.
3009 Highway 77, Suite H
Panama City, Florida 32405
Direct: 850.774.6582