FHA Mortgage Loans
The Federal Housing Administration (FHA) is the largest insurer of government backed residential mortgages. Due to their less rigorous lending standards and lower down-payment requirements FHA loans are an attractive product for borrowers in today’s market, especially with first-time home buyers. The FHA offers a multitude of loan products such as:
- Fixed Rate Mortgages – The most common loans from FHA
- Adjustable Rate Mortgages – Attractive to frequent movers
- Reverse Mortgages – Home Equity Conversion Mortgage (HECM)
- Graduated Payment Mortgage (GPM) – Payments Rise on a schedule
- Energy Efficient Mortgage – Provides funding for eligible improvements
- Condominium Mortgage – For FHA approved condominiums
- FHA 203k mortgage – To purchase and refurbish a home
reliable & safe
Credit qualifying criteria not as strict
FHA credit score requirements are far lower than other loan products. Buyers with less than perfect credit can qualify for an FHA loan. A borrower with a credit score of at least 580 can purchase a home with minimum down payment of 3.5%. In addition, those with credit scores below 580 can purchase a home with a minimum of a 10% down payment.
Low down payment required
According to FHA.gov, “Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.”
Refinance up to 97.75% of your homes value and with the FHA Streamline refinance you may not need an appraisal.
Lower credit score needed
Many borrowers believe that because their credit score is less than perfect they will pay a higher interest rate with an FHA loan. However, FHA interest rates are typically lower than conventional loans. Borrowers with a lower credit score can often qualify for the same interest rate as a conventional borrower with a higher credit score.
Easier down-payment requirements
Borrowers, especially first time home buyers, may have saved up enough for the down payment but may fall short when it comes to other requirements such as closing costs. FHA allows borrowers to use other sources than their savings toward their down payment. With an FHA loan, buyers may receive up to 6% from the seller towards closing costs, obtain a gift from a family member, or a grant from a state or local government down-payment assistance program.
What about mortgage insurance?
Because the FHA insures government backed loans, mortgage insurance is required to protect lenders against losses that result from defaults on home mortgages. Two types of mortgage insurance are required. The first is an upfront mortgage premium (UFMIP) that can be paid in full or can be financed into the mortgage. The current UFMIP is 1.75% of the base loan amount. The second is called the annual premium but is paid monthly. This premium varies based on several factors such as the term of the loan, loan amount, and initial loan-to-value ratio.
Mortgage cost calculatorJust enter your proposed mortgage amount, your assumed interest rate (APR) and your desired term for the new mortgage and click Calculate
This type of mortgage may not be right for you
Please note the following points and contact us directly for a free pre-qualification and guidance from real local mortgage people who genuinely care about providing you with the mortgage that best suites your needs.
Income requirements vary with each mortgage type. With some basic information we can advise you of the most suitable mortgage for your current income source(s).
No longer need to be a mystery to you. Once we have a mortgage credit report you will receive a full explanation, together with links to all appropriate resources enabling you to understand all your mortgage options.
Make sure to ask your mortgage loan originator to explain the down payment levels and source of fund options available to you across all mortgage loan options.
Many excellent sources of mortgage education are available to you. Some mortgage programs have specific courses that require completion; don’t worry, we provide all the details, help and connections you may need.