Wednesday, April 9, 2014

FHA Financing. Its everywhere you want to be - sort of.

So, FHA financing and in what cases is it still relevant. We can throw the 3.5% down payment aside. With the current pitfalls from FHA financing (noncancelable MI, upfront MI premium, etc.), buyers simply know that coming up with another 1.5% helps them avert a bunch of down sides.  So where does FHA financing make sense?

1. Multifamily property. If you are looking to purchase a duplex, triplex, or fourplex, the only way to get financing with less than 20% down payment is FHA financing.
2. Renovation financing. You can purchase a distressed or a property you just want to fix up and use the bank's money to do the renovation. This makes a bunch of sense because you can borrow based on the "after improved" value.

There are a couple of other instances where FHA may make sense, but these two are by far the most beneficial. These two options are ones that home buyers do not think of. Also, the beauty of both of these scenarios is that you will most likely have over 20% equity within a short time after you purchase the property. This means you can refinance and get rid of the mortgage insurance.

As always, I am happy to discuss financing options and scenarios and can be reached at

Thank you very much!