Sonoma County Mortgages

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now
  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • Scott Sheldon
    • Scott Sheldon
      Senior Loan Officer
      NMLS ID# 287389
      Direct: 707 217-4000
      Scott.Sheldon@nafinc.com
      Specializing in Residential Home Loans for Primary Residences, Second Homes, Investment Properties, Single Family Homes, Condos, PUDs, 1-4 Units.

Get Your Latest Rate Quote Now!

Lending LoopHole: FHA Loan For An Investment Property

December 29, 2013 by Scott Sheldon

Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Pin on Pinterest
Pinterest
Email this to someone
email
Print this page
Print
fha change to rental income to qualify

The FHA is aimed at promoting home ownership for consumers who do not ” fit the box”  by traditional credit standards, high credit score, big equity, low debt ratio etc. The FHA supports the housing market by offering an alternative financing vehicle for homeowners and buyers with little equity. The FHA makes loans on primary homes only -with a few exceptions…

Exception 1-As as long as the property used to be a primary residence and the mortgage is an FHA insured loan, you can still get a new FHA Mortgage for that same property. Here is a scenario that will pass the ‘makes sense test’-house was purchased and lived in. Same consumer purchased a different primary home moved into that property, and has been renting out the original home ever since relocating.

Exception 2- property was purchased as a primary home and lived in, loan on the property is an FHA insured loan, consumer purchased and moved into a new primary residence and has turned the original home into a second home/vacation property they visit a few times per year.

To meet the rule-property must have been a former primary residence and has a current FHA Loan tied to that home. In such a scenario, a consumer can refinance that loan under the FHA Streamline Refinance Program.

What consumers should be aware of is that in recent years, FHA has increased their mortgage insurance premiums which can make an streamline refinance less attractive as the mortgage insurance premiums are higher than in years past.

Current FHA Mortgage Insurance Factors

Includes up to 1.75% of the loan amount amortized over the term of the loan as well as a monthly mortgage insurance factor based on 1.35% off the loan amount prior to the upfront mortgage insurance premium being financed.

Confusing?

Here’s an example…

Taking a loan amount for $400,000, financed loan amount becomes $407,000. 1.75% of $400,000 translates to $7000 which is then financed over the term of the loan. The monthly mortgage insurance would be a pricey $450 per month  before principal and interest, fire insurance or property taxes are even accounted for.

FHA Refinance Deals Sweeten For Consumers Who Took Out Mortgages Prior To May 31, 2009

FHA Loophole –even if the property is an investment property or second home that used to be a primary residence, lower FHA premiums apply. The upfront mortgage insurance premium  financed over the term of the loan, drops to just .01% of the loan amount, and the monthly premium is just .55% of the loan amount. These numbers change considerably using our $400,000 example. Upfront fee financed and the term of the loan drops to $4000 and the monthly drops to $183, indeed attractive for a vacation home or an income property.

These numbers also apply even if the home is still your primary residence, occupancy does not change the terms  or amounts mortgage insurance.

More Scenarios for Occupancy Related FHA Mortgage Loans

Mortgage Tip: You can even have to two FHA Mortgage Loans out at the same time- yep, concurrently.

Trying to purchase another principal residence with an FHA mortgage?

If yes, here are some makes sense paths to explore:

  • new property would have to be out of a reasonable commute time  from the distance of your current primary home
  • growing family  creates the need for “more house”
  • departing from a jointly owned property with another party

Trying to get an FHA mortgage? Been  turned down because your scenario doesn’t make sense? Talk to a make sense mortgage lender for your FHA mortgage loan scenario. Let an FHA expert structure your loan today by getting a complementary mortgage rate quote.

 

 

 

 

 

 

Related Mortgage Advice from Scott Sheldon

  • FHA Streamline Refinances "The Truth"

    There is so much confusion out there associated with getting an FHA streamline refinance. You…

  • Income Property: Why These Mortgage Types Cost More

    Own an investment property? Thinking about buying a property for income producing purposes? It's going…

  • Why FHA Streamline Refinancing Is Over

    Anyone who has purchased a home in Sonoma County with an FHA Loan has probably…

  • Understanding FHA Home Loans

    The two types of loans offered by a local mortgage lenders are conventional loans and…

Filed Under: Invesment Properties/Second Homes, Loan Programs

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

SCM on Facebook

SonomaCountyMortgages.com

Location & Contact

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
1450 Neotomas Ave Suite 115
Santa Rosa, CA 95405
1-707-217-4000
Email Us!

Copyright 2019 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing | Privacy | Terms of Use | Electronic Consent Agreement

Connect With Scott In Your Inbox

Looking for a home? Real estate insider? Get connected with Senior Loan Officer Scott Sheldon. Scott stays updated on the latest in the mortgage industry, so you can stay updated with him!