Irish Central Community News is pleased to continue with our bi-weekly financial column, courtesy of Sean O’Sullivan of Arlington Financial. This time around Sean tackles FHA Loans.

FHA loans have been helping people become homeowners since 1934. How do they do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.

• Low down payments

• Low closing costs

• Easy credit qualifying

No minimum credit score – FHA does not have a minimum credit score requirement. The FHA underwriter will evaluate the entire credit profile to determine the borrower’s likelihood of repayment. Past credit issues may be overlooked if new credit has been re-established. Also, other compensating factors may apply. For example in place of conventional credit, alternate credit references are accepted, normally four references for 12 months or more. Alternate credit would be for example utility references from your electric, gas, oil, home phone, cell phone, car insurance, cable TV suppliers, etc.

• Bankruptcy okay – Chapter 7 bankruptcies are allowed if discharged over 2 years ago (or 1 year with extenuating circumstances). Chapter 13 bankruptcies are allowed with a minimum of 1 year of on time plan repayment and trustee approval.

• Little Money Needed - FHA loans allow the seller to pay up to 6% of the sales price toward the closing costs. On 1 to 4 family units and Condo’s, your down-payment can be as little as 3.5% of the purchase price.

• Housing History– FHA does not require a rental or other housing history if it is not available.

• Non-occupying co-borrower allowed – FHA allows a non-occupying relative to co-sign the mortgage. The non-occupant’s income and assets can be used for qualification purposes.

• Want a fixer-upper? - FHA has a loan that allows you to buy a home that’s in poor condition, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.

• Property types – 1 to 4 family units, condos, town homes, modular homes, and manufactured homes. Unfortunately Co-op’s are not allowed.

• No cash reserves required – Unlike most conventional loans, FHA does not require you to have cash reserves on 1 to 2 family unit properties. However, having reserves can help strengthen the overall credit profile.

For any additional information, or questions regarding other subject matter, contact Sean O’Sullivan at Arlington Financial. Phone: 914-793-1122, email: