What is an FHA loan?
What is a Federal Housing Administration loan?
Insured by the Department of HUD, FHA loans have become a staple for the any homebuyer looking to purchase a primary residence home. FHA loans have more liberal guidelines with respect to income qualification, credit rating, and lower down payments. A big attraction to the FHA loan is that typically FHA requires 3.5% down payment which is one of the lower down payment options. Contact your loan officer today to discuss the FHA loan product.
Making it Easier for Potential Homeowners to Secure Financing
The Federal Housing Administration (FHA) is a United States government agency created in 1934 by the National Housing Act. It insures mortgages which helps to mitigate the risk for lenders therefore making it easier for potential homeowners to secure financing.
Requires a Smaller Down Payment
FHA loans requires a smaller down payment than a conventional loan – potentially as little as 3.5% of the purchase price of the home.
There are some trade-offs to consider with an FHA loan. For example, borrowers are required to pay mortgage insurance premiums (MIP), which comes in two parts – an up front FHA Mortgage Insurance Premium financed into the loan amount of 1.75% and a monthly mortgage insurance payment of .85%. These figures are subject to credit qualification.
In addition, FHA loans may have different interest rates than conventional loans because they are backed by the government and seen as more risky.
Borrowers who do not have a strong credit history or a large down payment may still qualify for an FHA loan if they can demonstrate that they have a steady income and employment history.
If you think an FHA loan might be right for you, contact a mortgage lender to discuss your options.
FHA Appraisal Requirements
FHA requires borrowers are to pay mortgage insurance premiums (MIP), which comes in two parts – an up front FHA Mortgage Insurance Premium financed into the loan amount of 1.75% and a monthly mortgage insurance payment of .85%. These figures are subject to credit qualification.
Pros and Cons of an FHA Loan
Federal Housing Administration loans are popular among first-time homebuyers because they do not require a large down payment. Additionally, borrowers with less-than-perfect credit may still qualify for an FHA loan. However, there are some drawbacks to consider before applying for an FHA loan, including:
Mortgage insurance premiums (MIPs) can add up over time
Borrowers are limited to a maximum loan amount that varies by county
The home must meet certain safety and habitability standards
FHA Q&A
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Applicants for an FHA loan can have a credit score as low as 600, whereas conventional loans generally require a credit score of 620 or higher.
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Yes FHA requires borrowers are required to pay mortgage insurance premiums (MIP), which comes in two parts – an up front FHA Mortgage Insurance Premium financed into the loan amount of 1.75% and a monthly mortgage insurance payment of .85%. These figures are subject to credit qualification.
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FHA loan requires a smaller down payment than a conventional loan - as little as 3.5% of the purchase price of the home.
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Yes FHA requires borrowers are required to pay mortgage insurance premiums (MIP), which comes in two parts – an up front FHA Mortgage Insurance Premium financed into the loan amount of 1.75% and a monthly mortgage insurance payment of .85%. These figures are subject to credit qualification.
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FHA loan requires an FHA appraisal *see attached property minimum standard checklist
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Typically no unless there is any information disclosed in the listing or purchase agreement that would indicate radon testing is required.
How to Get Started
Interested in finding out whether renting or building a house is a better option for you? Check out our rent vs. buy calculator here!
If you think an FHA loan might be right for you, contact us to get started.
