- Introduction
- Acknowledgements
- 1: Getting Ready
- 2: The Costs of Space
- 3: Understanding Credit
- 4: Professional Services
- 5: Finding Space
- 6: Residential Leases
- 7: Commercial and Industrial Leases
- 8: Buying Real Estate
- 9: Types of Mortgages
- 10: The Mortgage Application
- 11: Ownership Models
- 12: Purchasing Alternatives
- 13: Chicago Zoning Ordinance
- 14: Chicago Building Code
- 15: Chicago's Neighborhoods
- 16: Property Taxes
- 17: When You Find a Property
- 18: Inspections
- 19: After Moving In
- 20: Insurance
- 21: Utilities
- 22: Rehabbing Your Space
- 23: Safe and Healthy Spaces
- 24: Green Practice
- 25: When Disputes Arise
- 26: Space Emergencies
- 27: Facility Development Planning
- Bibliography
FHA Mortgage
Pros
The Federal Housing Administration (FHA), established in 1934, is the oldest and largest insurer of residential mortgage loans in the U.S. An FHA loan offers lower down payment loans for qualified borrowers when compared to a conventional loan. Both fixed and adjustable rate mortgage products are available, and usually only require a minimum cash investment of 3%.
FHA loans will also accept funds from gifts, other loans, and grants from select sources to be used for down payments and closing costs. Unlike conventional loans, the maximum property debt ratio is increased to 29% compared to the 28% allowed for conventional loans, and the total debt ratio can be as high as 41% versus 36%.
While a conventional loan might require you to have at least a two-month payment reserve (money in the bank to cover the mortgage and/or insurance), this is not a requirement for FHA loans.
Cons
These loans have both income caps and limits on the mortgage amounts. Certain down payment assistance programs paired with government loans might also feature income caps.