FHA Loan Questions: down payment and student application?

[Linh Do]

Hello everybody, I'm a total newbie

I have done some research but I can't find the answers to my questions about FHA loan, hopefully somebody on BP could help me.

1 - I'm a student, about to graduate in March 2018, with over 1 year of internship, can I still apply for FHA loan as a student after my graduation? Will I need a job after graduation in order to apply for an FHA loan?

2 -Given I could get an FHA loan. I don't want to stuck with the insurance, so I'm planning to put 10% or more for down payment. But I don't have that much money, can I apply for a personal loan somewhere else to put into that down payment? Would you recommend using hard money lender for that 10% down payment and then after I could rent out the unit, I could pay it back?

Thank you very much for your time! 

[Andrew Postell]

@Linh Do thanks for posting.  These are very common questions to hear and it's no big deal to answer these.  Feel free to ask anything additional that you may need an answer to.  Here's your answers:

1. Yes, you will need AT MINIMUM a job offer in writing.  Unless your internship will continue after your graduation and that internship is a paid internship.  Your income is one of the primary items in your qualification.  Most people are required to have 2 years of experience but if you are a student, and receive a job offer in your field of study, the lenders are allowed to use your student history as your job history.  So if you have a job offer letter that has been signed by your future employer then we can use that income to qualify you for the loan.
2. Ah, the good ol' FHA "Mortgage Insurance". It's super annoying but without it, FHA would not be able to offer loans. Now currently FHA mortgage insurance is MANDATORY. So even if you have 20% down, you will stay pay mortgage insurance with an FHA Loan. However, if you have 20% down, then we should really be looking at a "conventional/conforming" loan instead of an FHA loan. A "conventional" loan is one governed by Fannie Mae and Freddie Mac (if you recognize those names). They do offer a 5% down minimum option and even a 3% down option in some cases. They will also have "mortgage insurance" too but it doesn't last as long. However, with 20% down, then NO mortgage insurance. And their fees are lower than FHA loans too. Just another loan type to consider.

Lot's to know so if you have more questions feel free to ask!  Thanks!