Texas FHA Loans
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FHA Closing Costs
Loan origination fee
– Mortgage lenders, brokers, or originators will charge a fee as compensation for their work or service. This fee imposed by the lender to extend the mortgage is called an origination fee. The origination fee is usually a percentage of the mortgage amount or a flat fee as a cost of obtaining funding from a certain lender.
Deposit verification fees
– A verification of deposit includes information about the borrower’s current balance, average daily and monthly balances, date the account was opened, name on the account, among others. Other accounts or assets such as retirement, 401k, annuities, etc., will also need to be verified by the processor.
– Attorney’s fees and notary fees are allowable fees on all FHA loans whether it is a purchase transaction or refinancing of an existing mortgage. The borrower may be charged attorney’s fees, only if the attorney is not an employee of the lender.
The appraisal fee and any inspection fees
– The borrower may be charged an appraisal fee. An appraisal is required on all FHA purchase transactions. Borrowers may be charged a pro-rata appraisal fee since the fee is charged by the appraiser. The fee may not exceed the actual appraisal fee. Inspection fees may be collected from the borrower for any inspections that must be conducted on the property.
Cost of title insurance and title examination
– The borrower may be charged title examination and title insurance fees, although they are not required by FHA.
Document preparation fees (by a third party)
– Document preparation fees may be charged only if the documents are prepared by a third-party and are not controlled by the lender. The lender may not charge a document preparation fee if they prepare the documents themselves.
– The borrower may be charged property survey fees, although they are not required by FHA. The title company will require a survey of the property to determine the meets and bounds, as well as easements and common areas.
Credit reports (actual costs)
– The lender can charge a fee for a credit report when the loan is manually underwritten. The lender may also charge a fee for Automated Underwriting System (AUS) credit reports.
– When the lender uses an Automated Underwriting System (AUS) that is not the lender’s own system or a system directly or indirectly owned by the lender, the lender may collect from the borrower the underwriting fee charged to the lender by the AUS. The lender can collect only one AUS underwriting fee from the borrower.
Transfer stamps, recording fees, and taxes
– The borrower may be charged for recording fees and taxes that are customary or required in the area.
Test and certification fees
– The borrower may be charged test or treatment fees that are required by FHA or the lender originating the loan. These fees include tests of water supplies, soil percolation tests for individual septic systems, or testing for or treating insect infestation.
Home inspection fees
– Home inspection fees up to $300, or the actual cost, may be included as closing costs in meeting the borrower’s minimum investment.
How much are closing costs?
The total dollar amount of closing costs in every loan will vary from lender to lender. The above list is a great guide to follow as far as which fees are allowed under the FHA loan program. For details and additional information, please contact our FHA Home Loan Specialists.
An FHA closing cost can be paid by the seller in form of contribution or Seller’s concessions. However, the closing costs cannot be included as part of the minimum down payment requirement of 3.5% and are considered a separate fee from the down payment itself. A borrower also cannot include or roll in the closing cost to the total loan amount. It either must be paid by the borrower at closing or paid by the seller as part of the concessions.
The closing costs of FHA loans will vary by lender. The average closing costs on a mortgage loan are between 2% to 5% of the purchase price. FHA loans allow sellers to contribute as much as 6% towards the buyer’s closing costs and prepaid items. Highly motivated sellers sometimes will agree to contribute 6% of the sales price to cover the buyer’s closing costs.
Closing Costs Calculator
If you wish to figure out how much the approximate closing costs would be to buy a particular house at a specific price, use this mortgage calculator by BeSmartee.
FHA Loan Benefits and Advantages
Compared to conventional loans, FHA carries a lower interest rate. Since HUD insures the loan against future default, it is offered a lower rate.
Minimum requirement for an FHA loan is only 3.5% compared to 5% on conventional loans. The borrower can also get a “gift” from family members to be used as a down payment on the house.
Required minimum credit score for an FHA loan is lower compared to the conventional counterpart. TexasFHA.org will extend an FHA loan to borrowers with middle FICO scores as low as 580.
FHA loans can go as high as 57% debt-to-income (DTI) ratio with an automated underwriting system approval. Conventional loans can only go as high as 45% DTI. What does this mean? This allows the home buyer to purchase a higher sales price home. Lots of times, the higher DTI decides if a borrower qualifies for a home loan or not.
An FHA Loan Specialist Available to Help You
Our FHA Loan Specialists are always available to help you and answer any questions. You may contact a dedicated FHA Loan Specialist through our website or by calling us directly. You may also chat with us to get a quick answer to your questions.
We make the FHA Loan Process Quick & Easy
Lenders often times will steer their clients away from an FHA loan due to their inexperience with the program. FHA Loans are a great source of funding for our clients. We share our knowledge and experience with FHA loans, making it easier for borrowers.
FHA Approved Lender
The Federal Housing Administration requires lenders offering FHA loans to go through an extensive approval process. We are FHA-approved and designated as a “Full Eagle” FHA mortgage lender offering FHA-insured home loans in Texas.
FHA Loans Help Make Home Ownership Possible For a Wider Range of People.