FHA Announces Down Payment Assistance Home Loans

FHA is rolling out a new loan program designed to stimulate the housing sector of our economy. If you have been waiting to buy a new home, but you do not have enough for the requested down payment then your prayers may have been answered. The new FHA home loan programs could provide credits to borrowers to pay from $7,500 to $15,000 in towards the down-payment costs. Many first time home buyers are realizing that down payment assistance programs exist from a select group of FHA approved loan companies. Whether you are looking for a "rent to own" home loan or government sponsored down-payment assistance, FHAHLR.com can help you research true solutions..

Many FHA finance companies indicated that the lowered mortgage rates for home loans have helped keep their business alive and helped put a smile on their FHA customers face. FHA has become a great alternative to both conventional and non-prime mortgages because they are flexible and affordable! Cash out refinancing volumes continue to rise with more and more borrowers deciding to refinance their first and second loan into a new mortgage that also gives cash back for home improvements.

Down Payment Assistance for FHA Loans

In a recent article, Pete Carey reported that many homeowners have been struggling with their current sub-prime loans. The new mortgage bill should help out 1 st time buyers and mortgage bankers as President Bush signed a new bill to revive the nation's moribund housing market. The bill's impact should be felt throughout Santa Clara County, from East San Jose and South County, where foreclosures have skyrocketed, to the wealthier cities farther north, where limits on some types of loans have complicated or stagnant refinance and home purchase loan. "We're really, really hoping this bill is going to make a difference," said Rebecca Gallardo, board chairman of the National Association of Hispanic Real Estate Professionals and a San Jose real estate agent. Another key provision of the Housing and Economic Recovery Act of 2008 is a Federal Housing Administration-backed foreclosure rescue lifeline for an estimated 400,000 homeowners who bought houses during the bubble of the past several years using exotic subprime-loan schemes that backfired, sending their interest rates soaring.

President Signs New Mortgage Relief Law

This mortgage rescue bill should help the people left who still have their homes, but who are not too far along in the foreclosure process. The home financing bill authorizes the sale of $10 billion in mortgage revenue bonds, which will be used to refinance these troublesome subprime mortgages into fixed-rate, 30-year loans with more affordable interest rates. "It's going be a big help," said Dave Walsh, president of the Santa Clara County Association of Realtors. "It gives the ability for some homeowners in financial duress to apply for and get some of these loan products." That will help the South County and East Side areas that have been hit hard by the subprime mess, Walsh said. "They are the special-needs borrowers, and those borrowers need help right now." The bill also offers a $7,500 income tax credit, repayable over 15 years, to first-time home buyers on qualified purchases from April 8, 2008, to June 30, 2009. There is also money for communities to fix up neighborhoods declining due to foreclosures.

The large package of reforms and market incentives also should deliver a reviving jolt to the state's mortgage industry. California's loan industry was already stimulated somewhat by an emergency measure that temporarily increased the "conforming" loan limit in high-cost areas from $417,000 to $729,750, which expires Dec. 31. Conforming loans are those that can be purchased by the government-sponsored mortgage giants Fannie Mae and Freddie Mac, which own half the country's mortgages, and loans they can purchase tend to have lower interest rates.

The new bill allows for a smaller increase Jan. 1 to $625,500, but it is permanent. The limit on FHA loans also will increase, to the greater of $271,050 or 115 % of an area's median home price up to $625,500. "If we had these higher-cost loan limits four years ago, buyers would not have had to go to the subprime market and would have been able to get an FHA loan," said California Association of Realtors President William E. Brown.

In 1999, there were 125,000 FHA loans in California, and in 2006, there were 5,000, Brown said. "It's not as much as we would have liked," said Cathy Warshawsky, president of the California Association of Mortgage Brokers Silicon Valley. "California is a high-cost state. It won't cover all the areas, but it's a start." "It will certainly add some life to the market," added Dustin Hobbs, spokesman for the California Mortgage Bankers Association. He said that while the temporary increase was bigger, key mortgage market players knew it would be gone by end of the year. "There wasn't the ability to sink your teeth in," Hobbs said. "Now that it's permanent, we can really get to work."

With the government increasing the funding for FHA insured loans we could see mortgage rate declining again in 2009. FHA rates have remained low for the year with affordable 30-year fixed rate incentives.