WHEDA FHA Advantage

In 1934 the United States congress created FHA (Federal Housing Authority) which originally was designed to insure loans offered to contractors that were building affordable housing.  Of course, over time the mission and goals of FHA changed to insure loans offered to people who needed to buy a home.  In 1972 Wisconsin organized the Wisconsin Housing Economic Development Authority, also called WHEDA, to help people of low income afford their first home.  Now, a new program is aiding even more potential home buyers.

WHEDA FHA Advantage

The FHA Advantage program offered by WHEDA takes all of the benefits of a FHA mortgage and applies it to the select group of people that WHEDA serves.  Some of the features of the FHA Advantage are

  • WHEDABorrowers without traditional credit reports can be eligible for the loan
  • Interest rates are low and fixed for 30 years
  • The mortgage can be assumed by a qualified borrower in the future
  • The borrower does not have to meet the 3.5% contribution rule.  The seller can receive a gift for the down payment
  • There is also the possibility of using the WHEDA Easy Close Advantage to help with the down payment

Who is Eligible?

In order to be eligible for the FHA Advantage loan, borrowers must meet a few criteria.

  • First and foremost, a person must be buying their first home OR buying a home within a target area defined by WHEDA
  • The buyer must attend a counseling course designed for home buying.  If the loan is more than 97% of the home’s purchase price, the counseling must be completed via a WHEDA approved agency.
  • The borrower must be able to document their work history for the past two years.  In addition, their income must be sufficient to meet their current obligations and the home loan
  • The buyer must intend to live in the home as their primary residence once the loan is completed.

Income Restrictions and Purchase Price Limits

In order to comply with FHA rules, there are income restrictions in two forms for the WHEDA FHA Advantage.  First there is the debt to income ratio.  The house payment may not exceed 31% of the borrower’s monthly income before taxes are deducted.  Furthermore, all debt, including the house payment, may not be more than 43% of the borrower’s monthly income before taxes are deducted.  In addition to these limits, there is a maximum amount of income that a person can earn and still be eligible.  The total of the gross monthly income for all the adults intending to live in the home may not be higher than the income limits established for the county that the property is located.  There is also a purchase price limit determined by the county of the property’s location.  To view the various limits you can click here.

With rates at historical lows, and the help of WHEDA, many Wisconsin residents are able to buy their first home and enjoy a new kind of happiness.

An update in regards to the new Mortgage Guidelines:

In step with the conventional loans, the Federal Housing Administration (FHA) has issued changes to their lending guidelines. All FHA loans will have to follow a set of rules to ensure that the loans are Qualified Mortgages (QM). However, the FHA loans offered through WEDA are considered a Housing Finance Agency transaction. As such, FHA has ruled that any FHA qualified mortgage offered by a housing finance agency will not have to meet the QM standards. For this reason, the WHEDA FHA loans will continue without any foreseeable changes.

This communication is provided to you for informational purposes only and should not be relied upon by you. Rock Realty is not a mortgage lender and so you should contact a WHEDA lender directly to learn more about its mortgage products and your eligibility for such products.

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