Garden State Mortgage: New Jersey based mortgage programs - The Federal Housing Administration (FHA) is an Agency of the U.S. government which insures mortgage loans made by Mortgage Bankers. Non-occupying co-borrowers are very common with FHA loans. Below are mortgage amounts for Bergen/Passaic County New Jersey.

The Federal Housing Administration (FHA) is an Agency of the U.S. government which insures mortgage loans made by Mortgage Bankers. The FHA serves the mortgage lending community much the same way Private Mortgage Insurance (PMI) companies do on conventional (non-government) loans. The FHA will insure loans made to U.S. citizens, permanent resident aliens, and non-permanent resident aliens who are legally able to work in the United States.

The FHA has several different programs. The most common are the 15 and 30 year fixed rate and the 1 year ARM. The buy and fix-it program known as the 203K has become increasingly popular and much more widely available since former Secretary of the Department of HUD Jack Kemp "rediscovered" its value to America during his tenure.

There are no income limits imposed by the FHA unlike some First Time Home Buyer programs. The only limit on FHA loans are the maximum mortgage amounts. The mortgage amount for Bergen/Passaic County New Jersey are as follows:

The FHA requires at least one purchaser to occupy the property. Non-occupying co-borrowers are very common with FHA loans. The non-occupying co-borrower must be a blood relative or be able to establish a family relationship to the occupying purchaser. FHA borrowers whose past or current credit is not so good are encouraged to go to an FHA approved credit counselor for credit counseling. This credit counseling will greatly improve a marginal borrowers chances of getting approved. There is no charge for the counseling.

The FHA standard qualifying ratios are 29 and 41 percent of gross monthly income. Ratios can be exceeded, and frequently are, when the borrower can demonstrate compensating factors. An experienced mortgage consultant can advise a borrower what constitutes compensating factors. Borrowers are not allowed to borrow the money used for the down payment or closing costs. However, a notable exception to this is money in a 401K plan. In addition the payments made on a 401K loan are not calculated into the qualifying ratios.

As mentioned before, the FHA is an insurance agency. There is a Mortgage Insurance Premium (MIP) that is paid upfront at the time of closing and it is usually financed. The amount is 2.25 percent of the loan amount on a 30 year mortgage. If the loan is paid off early the borrower is entitled to a partial refund of .5 percent of the loan amount.
Special rules apply for three and four family properties. First, cash reserves of at least two months of the proposed mortgage payments are required on all three and four family properties. In addition, the mortgage payment must not exceed 90 percent of the rental income, as estimated by the appraiser, on the purchased property. Also, all three and four properties must be registered with the New Jersey Department of Consumer Affairs.

The FHA allows cash-out refinancing up to 85 percent of the appraised value and no cash-out refinancing up to 97 percent of the appraised value.