The Federal Housing Administration was established to encourage
home ownership throughout the country with the belief that home
ownership increases the stability of a community. Prior to the creation
of the FHA, large down payments were required to secure a mortgage
loan. At present, a minimum of 3% investment is required by the
borrower for the purchase of a home. As an incentive to investors
who purchase loans, FHA insures the loan against default, should
the borrower fail to repay. FHA guidelines also allow for greater
flexibility with regards to credit history and qualifying ratios.
Hawaii FHA program opens up opportunities that conventional mortgages
do not offer:
- Expanded Debt Ratios to 29%/41%
- Non-traditional credit history is considered
- Expanded credit criteria.
- All of the down payment may be gifted
- Seller may contribute up to 6% toward the closing costs.
- Non-occupant cosigners are allowed.
- 401-k loans are not counted in the debt ratios.