Most of my business consists of hard money loans for San Diego and hard money loans for Los Angeles. With the new FHA that allows your FICO scores to be as low as 580, also know as the new subprime,(Ha!) one might be wondering why someone would still need hard money for Southern California real estate?

First, FHA now carries a hefty upfront mortgage insurance premium. Prior to April 9, 2013, it was 1%. Now it is 1.75%. And the monthly mortgage insurance premium went from 1.15% to 1.25%. And June 3 of 2013, most FHA loans will pay mortgage insurance premium for the full 30 years. FHA is making hard money look good.

As many buyer’s agents have been finding out, try submitting an offer to purchase with FHA financing in this time of multiple offers. It won’t be accepted over the cash offers for sure and probably not going to be accepted over non FHA loans.

Hard Money loans are easy. You need enough down payment for a purchase and for a refi on your non owner occupied property, you need some equity. Listing agents are willing to accept offers which are with hard money, knowing that it’s quick and almost as good as cash.

I don’t think anyone has come up with a good reason why FHA is going to make you pay the mortgage insurance premium for the life of the loan. Perhaps they will go away because right now, I don’t see a whole lot of people wanting to go that route.