FHA100 or FHA 100% Financing refers to specific programs that combine FHA loans with down payment assistance (DPA) to potentially allow buyers to purchase a home with no down payment required. Here’s an overview based on recent information:

Program Basics:

• FHA Loans: Typically require a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher. However, FHA100 programs aim to circumvent this requirement by providing additional financing.
• Down Payment Assistance: The FHA doesn’t offer down payment assistance directly, but various state, local, and private programs can be used in conjunction with an FHA loan. This assistance can come in the form of grants, forgivable loans, or deferred payment loans.

Key Features:

• Zero-Down Payment: By combining FHA loans with down payment assistance, buyers can effectively achieve 100% financing, meaning no personal funds are needed for the down payment.
• Eligibility: Borrowers still need to meet standard FHA loan requirements, which include credit scores, debt-to-income ratios, and homebuyer education for some programs.
• Second Mortgage: Often, down payment assistance comes as a second mortgage. Terms can vary:
  • Forgivable: Some second mortgages are forgiven after a set period if conditions like living in the home for a certain number of years are met.
  • Deferred: Some loans have payments deferred until after a certain period or event (like selling the home).
  • Repayable: Might have repayment terms with low or no interest, typically over a longer duration than the first mortgage.

Examples of Programs:

• FHA Fast 100: Offers 3.5% down payment assistance in the form of a secondary mortgage, available in many states, not limited to first-time homebuyers or specific professions, with no income limits.
• FHA HUD $100 Down Program: Specifically for purchasing HUD-owned homes, where instead of the standard 3.5% down, buyers only need to pay $100. This program is aimed at quickly selling foreclosed properties and is only for owner-occupants.
• Various State and Local DPA Programs: Many states have their own or work with entities to provide programs that can be used with FHA loans to achieve 100% financing. Examples include the Florida Hometown Heroes Loan Program or the MyHome Assistance Program in California.

Considerations:

• Interest Rates: The second mortgage might come with higher interest rates or different terms than the primary FHA loan.
• Long-term Costs: While no down payment is a significant benefit, the overall cost of the loan might be higher due to additional interest or fees on the second mortgage.
• Program Availability: These programs can vary by location and availability, so not all FHA loans will qualify for zero down payment through DPA.

Conclusion:

FHA100 or similar programs are designed to make homeownership more accessible, particularly for those who don’t have the savings for a down payment. However, it’s crucial for potential buyers to understand the terms of both the primary FHA loan and any secondary financing or assistance, as these can affect long-term financial commitments. Always consult with a knowledgeable lender to navigate these programs effectively.