Since the economic stimulus package, real estate brokers are letting homebuyers know that there is a window of opportunity with Federal Home Administration loans, according to mortgage FHA lenders.

FHA mortgage loans lost their popularity especially in such high-cost areas as California in the 1990s, as home values began inching upward, surpassing FHA mortgage limits. Also, many felt FHA had very strict credit standards and too many stringent and burdensome appraisal requirements, and often it took too long to close an FHA loan.

With conventional and FHA Home Loan limits raised to $729,750 for Santa Clara County, FHA loans have become a very feasible option for homebuyers, especially since the county’s median price is now less than the maximum loan amount. DataQuick Information System’s recently disclosed the median price paid for a Santa Clara County home in March 2008 was $620,000.

Raising the loan limits should allow a larger pool of borrowers to qualify for lower-cost mortgages or to refinance existing mortgages. FHA mortgage loans offer many benefits that other loan products do not provide. FHA insures the mortgage, so the lender can offer a borrower a better deal. FHA requires very little down payments with low closing costs and they even allow low credit scores.

• FHA home mortgages are assumable loans.

• Credit requirements are more flexible than conforming loans. You may qualify for an FHA loan even if you have low credit scores. If you have filed for Chapter 7 bankruptcy in the past, you can obtain an FHA mortgage 2 years from the date of your bankruptcy discharge.  FHA actually allows you to refinance out of a Chapter 13 Bankruptcy if you have been in it for more than a year. as long as you’ve maintained good credit since your debts were discharged.

• FHA maintains a debt to income ratio of 31/43%  

• Co-signing borrowers need not be occupants of the home.

• FHA appraisal requirements mandate certified FHA approved appraisers

• The FHA scorecard has helped standardize automated underwriting with DU, DO and LP.