If you need assistance with funding your real estate dream, the Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) can facilitate your mortgage loan for you. The government offers different HUD and FHA-insured loans for multifamily and single family properties.
These agencies do not finance your investment. Instead, they guarantee a private HUD-approved lender that you will repay your loan. They have different types of programs for different financing needs.
FHA 203 (b) Loan
This is the most basic program for single-family housing. It enables homeowners to purchase or refinance a principal property. Borrowers must have a credit score of 580 or higher and properties should be one- to four-unit structures.
Adjustable Rate Mortgages
Unlike a fixed rate mortgage, ARM’s interest rate is adjustable. This is comprised of the index, margin, interest rate cap structure, and initial interest rate period. The lender adds the margin and the index to get the new interest rate once the initial interest rate period has expired
This is a good option if you plan to own a home for only a short time.
Home Equity Conversion Mortgages for Seniors
Homeowners aged 62 and above can withdraw a portion of their home equity with this reverse mortgage program. This is if the homeowner has already paid a considerable amount of the mortgage loan or has paid it in full. The amount of money that can be withdrawn depends on the borrower’s age, the current interest rate, sales price, and the FHA mortgage limit.
Section 207/223 (F)
This program facilitates the purchase or refinancing of an existing multifamily rental housing that has been financed originally with conventional or FHA-insured mortgages. Multifamily properties that need critical rehabilitation are not eligible for this program.
Additionally, the properties have at least five residential units with complete amenities including kitchen and bathrooms.
Section 221(d) (4)
This facilitates mortgage loans for the new construction or general reparation of multifamily rental housings or cooperative residences for low-income families, elderly, and people with disabilities. It also includes single room occupancy projects.
The FHA-backed mortgage loan can be used to finance the construction of detached or row housing, or the elevators of properties with five or more units. Public, for-profit sponsors, non-profit cooperatives, and general mortgagors are eligible for Section 221 (d) (4).
With the collaboration of private lending institutions and the government, you have many options to finance your real estate investment. This is why it’s not time yet to give up on the American dream of homeownership.