FHA loans - the Affordable, Safe alternative to Fannie & Freddie Conforming loans

We strongly believe that FHA Loans are the safer, more affordable alternative to Fannie & Freddie loans. Here is a quick comparison of the benefits and differences between the two.

All comparisons are based on a purchase price of $250K, fico score of 675, and full documentation. Rates are example only, presented for sample scenario comparison only.

Fannie & Freddie require a minimum of 10% down in California (are capped at 90% LTV).

FHA requires just 3% down (goes to 97%). You can keep the 7% difference in the bank, which gives you liquidity, security, and peace of mind. (the difference is $17,500) The payment difference is minimal (see below for detailed comparison).

Mortgage Insurance Qualification: Fannie & Freddie utilize private mortgage insurance, which requires a second underwriting process from the Private Mortgage Insurance company the lender utilizes. These companies have increased the thresholds for homeownership in recent months. For instance, They require atleast a 10% downpayment in California & have additional underwriting criteria for homeowners or homebuyers in Declining states such as California. **FHA requires just 3% downpayment nationwide, with no adjustments or additional criteria for Declining Markets.

The monthly mortgage insurance rate on Private Mortgage Insurance is between .62% -.78%. Monthly Insurance Premiums for FHA are just .55%. Even more appealing is that the FHA premium is for a 3% downpayment, whereas the private Mortgage Insurance rates are for 10% down payment.

The Private Mortgage Insurance companies do allow a program called "Lender Paid MI" (MI = Mortgage Insurance). With this program you are still capped at 90% in California, however the cost is not paid monthly, it is paid with a higher interest rate. Typically .75% is added to your rate to cover the cost of the Lender Paid MI.

FHA does have a second Mortgage Insurance cost, the Upfront Mortgage Insurance Premium (UFMIP). This amount is 1.5% (soon to increase to 1.75%, which we will us in our example). This lump sum fee can be paid either in cash at closing, or added to your loan amount. Adding the UFMIP to your loan amount is the most common method. However, if you are receiving a large seller credit towards your closing costs, these can be applied to your UFMIP.

Fannie & Freddie require a 620 minimum score to put down less than 20% (ie go over 80%).
FHA has no minimum. However, most FHA Lenders do require a 550 mid fico score.

Fannie & Freddie have price premiums or increased rates for loans that are over 80%. FHA does not increase the rate in this manner.

Here are the real numbers for the sample scenario above ($250K purchase price, 675 mid fico score, purchase loan, California home)

	FHA Home Loan	Fannie & Freddie	Fannie & Freddie
	UPMIP & Monthly MI	Monthly MI	Lender Paid MI
Purchase price	$250,000	$250,000	$250,000
Down Payment %	3.00%	10.00%	10.00%
Down Payment $	$7,500	$25,000	$25,000
Base Loan amount	$242,500	$225,000	$225,000
UFMIP (FHA only)	$4,243	$0	$0
Total Loan Amount	$246,743	$225,000	$225,000
Rate	5.500%	5.875%	6.375%
Principle & Interest payment	$1,401	$1,330	$1,414
Taxes (1.25% rate)	$260	$260	$260
Homeowners Insurance	$52	$52	$52
Mortgage Insurance Factor (Monthly)	0.55%	0.62%	0
Mortgage Insurance (monthly)	$113	$116	$0
Total Monthly Housing payment	$1,826	$1,758	$1,726
All amounts are estimates, provided only to show the comparison between these
loan programs.
Compare after 5 yrs and again after 10 years.
After 5 years, let's compare:
monthly payment	$1,713	$1,645	$1,726
Monthly payment Savings	$0	$4,080	$6,000
Bank account ($17,500 @ 4% interest)	$21,297	$0	$0
True savings after 5 years	$21,297	$4,523	$6,630
Interest Paid - years 6-10	$59,582	$64,122	$70,236
extra interest paid vs FHA	$0	$4,540	$10,654
bank acct after 10 years	$33,428	$17,762	$14,774
True savings after 10 years	$33,428	$13,222	$4,120
Assumes that you actually invested the monthly savings each month, made no withdrawals,
interest rate was constant at a conservative 4%,
continued to save the additional amounts below the $1826 after MI was stopped, etc

**All amounts are estimates only, provided only to show the comparison between these loan programs on a given day for a sample scenario.

The FHA Loan is the safest overall option, as it is safer to have a slightly higher Mortgage payment along with $17,500 in savings, than to put the extra money into your downpayment and save just a few dollars per month. You will have the $17,500 earning interest, available for emergencies, and diversifying where your money is stored. I think it is safe to say that storing money in your home is not the safest method of savings.
FHA also offers a couple of programs that Fannie & Freddie do not:

FHA Secure - for homeowners who want to refinance their ARM or Adjustable Rate Mortgage into a safe, secure, fixed rate FHA Loan. This program even allows Short Payoffs, or a Short Refinance. This is where the current lender accepts less than owed, to help the homeowner get into a safe, new loan based on current values. This program allows late payments on the mortgage.

FHA Hope for Homeowners - This is another FHA program that facilitates Short Refinances of your current loan. This program allows some mortgage lates, and gives the banks clear criteria for how much they will receive when agreeing to enter into the Short Refinance into a Hope for Homeowners loan. This loan does have an equity sharing agreement, where the homeowner must agree to share future appreciation in their home above the new lower loan amount with FHA in the event they Refinance or Sell their home in the next 10 years. This is a fair trade for the life preserver this loan offers.

The FHA 203K Streamline loan - This loan allows homeowners to Purchase or Refinance their property and include up to $35K of repair/upgrade work into the primary loan. This avoids the higher interest rates of Equity loans. You have one payment at a low fixed rate.

When it is time to purchase or refinance your home, contact the FHA experts at VanDyk Mortgage. 866-900-2342 toll free or online at http://www.vandykfunding.com/

VanDyk Mortgage is a FHA Direct Lender doing FHA loans (and Fannie / Freddie loans too) in many states including California, Washington, Florida, Georgia, and more.

 We offer VA Loans,  FHA Loans, USDA Loans, and more across Tennessee.   

FHA changes help Homeowners to buy REOs / Bank Owned Homes

HUD has recently made changes allowing homeowners to qualify for FHA loans when buying homes that have been foreclosed, returned to lender (deed in lieu of foreclosure), AKA REO properties. REO stands for Real Estate Owned, which are essentially Bank Owned Repos.

Outdated regulations from HUD to prohibit property flipping and false price appreciation made it difficult for banks to sell recently foreclosed properties due to a HUD rule which prohibited the use of a FHA loan to purchase a home that had not been owned by the seller for atleast 90 days.

This has now been lifted until June 2009.

This will allow homeowners to qualify for Safe, Secure, & Affordable FHA loans to purchase the numerous bargain priced REO or Bank Owned properties coming to market.

We are here to help.

We can help you get the home of your dreams with a Safe, Secure, Affordable FHA loan. Call us at 866-900-2342 toll free to get details and achieve your dream of owning a beautiful new home. VanDyk Mortgage is a Full Eagle Direct Endorsement FHA Direct Lender. We have over 20 years in business Lending FHA loans direct to consumers. Call the experts.

We serve the following areas for FHA and Conventional loans: California, San Diego, San Marcos, Carlsbad, Oceanside, Vista, Escondido, Fallbrook, Bonsall, Riverside, Los Angeles, Orange County, Irvine, Corona, Anaheim, Santa Ana, Seattle, Washington, Bellevue, Kirkland, Redmond, Lynnwood, Olympia, Tacoma, Puyallup, Buckley, Auburn, Kent, Federal Way, Seatac, San Francisco, San Jose, Carson, Gardena, Hawthorne, Lawndale, Inglewood, Ladera Heights, View Park, Windsor Hills, Baldwin Hills, Fox Hills, Culver City, Beverly Hills, Malibu, Santa Monica, Brentwood, Calabasas, Encino, Bel Air Estates, Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates, Manhattan Beach, Redondo Beach, Hermosa Beach, Torrance, San Marcos, San Diego, Rancho Bernardo, Carlsbad, Escondido, Poway, Oceanside, Vista, Encinitas, Carmel Valley, Scripps, Tierra Santa, El Cajon, La Jolla, Chula Vista, National City, San Ysidro, Santee, Eastlake, Ramona, Long Beach, Artesia, La Palma, Cerritos, Compton, Lynwood, Bellflower, Temecula, Murrieta, Southern California, Washington, Everett, Lynnwood, Tacoma, Kent, Federal Way, Auburn, Renton, Bellevue, Redmond, Kirkland, Whittier, Santa Fe Springs, Downey, Irvine, Newport Beach, Los Angeles, San Bernardino, Riverside and Orange County.

Fannie Mae changes Declining markets policy

Fannie Mae announced that they will no longer require an extra 5% down payment for purchases in "Declining Markets" beginning June 1.

The real question is will this change help. The answer is Yes for some borrowers, and not at all for others. There are 2 factors above and beyond Fannie Mae's basic guidance that will continue to hinder homebuyers looking to put less money down. Mortgage Insurers have increased minimum Fico requirements for all loans, especially those over 90% loan to value. Please note that FHA loans do not have Fico minimums at this point. The other factor effecting the quality of the Fannie Mae loan is the "risk premiums" associated with loans over 90% Loan to value. Fannie Mae loans have higher risk premiums (IE higher rates) for these loans. Once again, FHA does not penalize borrowers for opting to put the standard 3% down payment. The rate is the same for 90%, 95% or 97% FHA loans. Fannie Mae rates may vary as much as 1% on these amounts. Now that's alot of money. You can see why FHA loans are quickly becoming the most popular loans in the USA again.

Give us a call to see if our FHA Direct Loans are right for you. Call Brian Skaar at 760-752-4480. Or visit us online at www.vandykfunding.com.

Quick primer on new California FHA loan limits

The mortgage limits set by HUD for FHA loans (Federal Housing Administration) for California counties were raised in March. The new limits are set relative to the median price of homes in each county. The bad news: the new limits will only be effective until the end of 2008.
San Diego’s limit has been raised to $697,500 from just over $362,000, while Orange County and Los Angeles county are both at the max of $729,750 now. This change comes as part of the effort to support the origination of larger mortgages, which should lead to lower interest rates. Many Jumbo loan holders or home buyers have been hesitant to finance given the high rates that Jumbo loans have experienced the past few months.

FHA Mortgage Limits in California by County

Alameda County
Median home price $995,000
new FHA Limit $729,750

Alpine County
Median home price $438,000
new FHA Limit $547,500

Amador County
edian home price $355,000
ew FHA Limit $443,750

Butte County
Median home price $320,000
new FHA Limit $400,000

Calaveras County
Median home price $370,000
new FHA Limit $462,500

Colusa County
Median home price $318,000
new FHA Limit $397,500

Contra Costa County
Median home price $995,000
new FHA Limit $729,750

Del Norte County
Median home price $249,000
new FHA Limit $311,250

El Dorado County
Median home price $464,000
new FHA Limit $580,000

Fresno County
Median home price $305,000
new FHA Limit $381,250

Glenn County
Median home price $230,000
new FHA Limit $287,500

Humboldt County
Median home price $315,000
new FHA Limit $393,750

Imperial County
Median home price $260,000
new FHA Limit $325,000

Inyo County
Median home price $350,000
new FHA Limit $437,500

Kern County
Median home price $295,000
new FHA Limit $368,750

Kings County
Median home price $260,000
new FHA Limit $325,000

Lake County
Median home price $321,000
new FHA Limit $401,250

Lassen County
Median home price $200,000
new FHA Limit $271,050

Los Angeles County
Median home price $710,000
new FHA Limit $729,750

Madera County
Median home price $340,000
new FHA Limit $425,000

Marin County
Median home price $995,000
new FHA Limit $729,750

Mariposa County
Median home price $330,000
new FHA Limit $412,500

Mendocino County
Median home price $410,000
new FHA Limit $512,500

Merced County
Median home price $378,000
new FHA Limit $472,500

Modoc County
Median home price $125,000
new FHA Limit $271,050

Mono County
Median home price $370,000
new FHA Limit $462,500

Monterey County
Median home price $599,000
new FHA Limit $729,750

Napa County
Median home price $615,000
new FHA Limit $729,750

Nevada County
Median home price $450,000
new FHA Limit $562,500

Orange County
Median home price $710,000
new FHA Limit $729,750

Placer County
Median home price $464,000
new FHA Limit $580,000

Plumas County
Median home price $328,000
new FHA Limit $410,000

Riverside County
Median home price $400,000
new FHA Limit $500,000

Sacramento County
Median home price $464,000
new FHA Limit $580,000

San Benito County
Median home price $790,000
new FHA Limit $729,750

San Bernardino County
Median home price $400,000
new FHA Limit $500,000

San Diego County
Median home price $558,000
new FHA Limit $697,500

San Francisco County
Median home price $995,000
new FHA Limit $729,750

San Joaquin County
Median home price $391,000
new FHA Limit $488,750

San Luis Obispo County
Median home price $550,000
new FHA Limit $687,500

San Mateo County
Median home price $995,000
new FHA Limit $729,750

Santa Barbara County
Median home price $615,000
new FHA Limit $729,750

Santa Clara County
Median home price $790,000
new FHA Limit $72,9750

Santa Cruz County
Median home price $719,000
new FHA Limit $729,750

Shasta County
Median home price $339,000
new FHA Limit $423,750

Sierra County
Median home price $228,000
new FHA Limit $285,000

Siskiyou County
Median home price $235,000
new FHA Limit $293,750

Solano County
Median home price $446,000
new FHA Limit $557,500

Sonoma County
Median home price $530,000
new FHA Limit $662,500

Stanislaus County
Median home price $339,000
new FHA Limit $423,750

Sutter County
Median home price $340,000
new FHA Limit $425,000

Tehama County
Median home price $250,000
new FHA Limit $312,500

Trinity County
Median home price $200,000
new FHA Limit $271,050

Tulare County
Median home price $260,000
new FHA Limit $325,000

Tuolumne County
Median home price $350,000
new FHA Limit $437,500

Ventura County
Median home price $599,000
new FHA Limit $729,750

Yolo County
Median home price $464,000
new FHA Limit $580,000

Yuba County
Median home price $340,000
new FHA Limit $425,000

100% financing for Commercial properties still available

100% financing for Commercial properties still available

Strange as it may sound "100% financing" for commercial properties still exists. We offer this program for owner occupied commercial space. It is very popular with Commercial Condo's for purchase & build-out.

We can finance the base purchase price, the build-out of the interior, and sometimes even your closing costs and interest during construction. These loans are great for professionals such as Doctors, Dentists, Consultants, etc that want to establish their practice in their own space and stop paying rent.

Call Brian Skaar for details, and to see if this is the best solution for your business at 866-900-2342 (toll free) or apply via our website at www.vandykfunding.com.

New Loan Limits released

HUD has finalized the new 2008 loan limits for FHA, FNMA & FHLMC backed loans.

The new limits increase the max loans for FHA from just over $368K up to $729,750. Although the highest amounts are for high cost metropolitan areas such as Los Angeles, New York, & San Francisco, Every county in America benefits from an increase in the FHA loan limit from $200K to a new minimum limit of $271,050. This helps to increase the number of US households that can qualify to purchase and refinance their homes.

You can find the new limits for your area here: 2008 Loan Limits .

FNMA & FHLMC, AKA Fannie Mae & Freddie Mac, are both GSE's or Government Sponsored Enterprises that purchase loans made by Mortgage Banks that meet their criteria. The new loan limits for Fannie & Freddie rose from $417K up to $729,750 as well in many areas, depending on Geographic area based on housing prices. Many areas did experience a significant increase in this amount, even if it didn't go to the max ceiling. For instance, Seattle homes can now qualify up to $569,500, and San Diego homes now qualify up to $697,500.

Please do not hesitate to call us to find out if the new loan limits can help your financial plans.
Our toll free number is 866-900-2342.

You may also apply online to get your home loan quote at http://www.vandykfunding.com/ , simply click on the Loan Application button at the top of the page.

Help for US homeowners

Help for US homeowners came this past week in the form of Increased Loan limits for Fannie Mae (FNMA), Freddie Mac (FHLMC), and Ginnie Mae (Government loans such as FHA, VA, & FHA Secure). This week the United States Congress, the US Senate and our President, G.W. Bush all came to an agreement on an economic stimulus bill that includes a very important set of provisions for Homeowners. It increases the loan limits for the above entities from a cap of $417,000 for Fannie & Freddie and $362K for FHA to as much as $729,750 in high cost areas such as Coastal California, parts of Florida, New York, and select markets. This is likely to help many thousands of homeowners refinance and purchase homes with affordable, secure financing for their homes during the next year. The increases are temporary (until December 31, 2008) for some of the programs, so those looking to refinance or purchase a home should contact us very soon to get started. This will not only result in lower rates for many loans formerly considered "Jumbo", but will help many folks get qualified as these loan programs allow financing up to 97% of a homes appraised value without large penalties or rate increases.

This is welcome relief for thousands of Adjustable Rate Mortgage (ARM) holders who are worried about interest rate resets and increased payments that can now lock into a more secure 30 year fixed rate mortgage at competitive rates.

VanDyk Mortgage is ready to meet the increased demand with our simple streamlined process for loan application & documentation gathering. Consumers can apply direct at www.vandykfunding.com, then go to the secure "loan application" button at the top of the page. Our processes are largely paperless, which will reduce the timelines for your loan approval and closing. This will help you ensure the best rate for your loan.

VanDyk Mortgage is a privately held Mortgage Banker offering loans accross much of the nation. We have been in business over 21 years, offering FHA, VA, and Conventional financing direct. We are considered experts at FHA loans due to our large volume with HUD. VanDyk Mortgage is a "Full Eagle" FHA Direct Endorsement underwriter (title earned from HUD based on performance) an accomplishment that we are very proud of. This helps us to get you approved for FHA loans, whereas some banks may lack the leverage to help out those with some credit issues.

Please visit us online at www.vandykfunding.com or give us a call at 866-900-2342 to ask us any questions you may have about your loan, the mortgage market, or just to say hello.