The Federal Housing Administration 203(B) Loans Essay

The Federal Housing Administration 203(B) Loans Essay

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As a newcomer to the world of home buying in the state of Texas, it’s important to do research on loans and mortgages. Maybe you’re fed up with making rent payments or maybe you’re newly married and ready join the ranks of being a home owner. Put simply, you know you don’t have a lot of money and homes that need some repairs or updating are the only homes in your price range. This situation may seem less than ideal, but is one that many people are finding themselves in. Fear not, this is the age of do-it-yourself. Did you know you can actually receive assistance to help you buy a house needing repairs or updates? The Federal Housing Administration, a sector of the United States Department of Housing and Urban Development, provides FHA purchase loans for different types of home seekers. Texas FHA loans are becoming more widespread today.

The most popular FHA purchase loans are the 203(b) loans, which allow you to purchase a house and fix it up, with all of the costs of repair included in the loan amount, or to simply refinance a house. This is a benefit for first time home-buyers, especially ones who are young or simply do not have the funds to spend on a hefty down payment. An added benefit to buying a fixer-upper is that you can make changes to the house that you actually enjoy.

A common misconception is that the FHA is giving you the loan money. This is not true. Think of it more as mortgage insurance. The loan is still being funded through a participating lender, such as your bank, a loan association, or a mortgage company. The purpose of the FHA is to guarantee to purchase the mortgage should the home owner go into default or foreclosure. This reduces the risk to loan lenders because they will still get paid for the mort...

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...not be able to afford. This can be assessed by evaluating income and monthly expenses. These debt ratios will vary by state and possibly even by county. The Houston, Dallas-Fort Worth, and San Antonio metro areas typically have a higher mortgage limit because there is a higher cost of living in a metropolitan area. The difference in limits in between metro and non-metro areas in Texas can be anywhere from $25,000 to $75,000. Housing purchase prices can vary up by to $200,000.

These FHA mortgage loans are growing in popularity among Texas residents, as well as across the nation. There are 1,500 FHA lenders alone in the state of Texas, so getting more information is right at your fingertips. If you are considering a 203(b) plan, good first steps in applying for Texas FHA loans are to check your credit score and contact your bank to learn more about your options.

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