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FHA Loans

FHA Loans

FHA loans are a type of mortgage loan insured by the Federal Housing Administration (FHA). These loans are designed to help first-time homebuyers, as well as individuals with lower credit scores or limited financial means, become homeowners. These loans are not funded by the FHA, rather they are simply guaranteed by FHA, the individual lenders lend you the money so terms do vary slightly.

  • Credit score requirements are lenient when it comes to FHA loans. You can qualify for a FHA mortgage with a credit score as low as 500, but above 580 is more desirable. Of course, the higher your score, the better the terms for your loan.

  • If your score is 580 or better, lenders will finance your loan for as little as 3.5% down. If your score is below 580 you will have to put down up to 10%.

  • FHA Down Payment Assistance Yes! You can get Down Payment Assistance in a variety of ways. 1. Grant Programs from the state 2. Gift Funds from Family 3. Retirement Accounts / 401k 4. Checking / Savings

  • FHA loans typically require you to keep your debt/income ratio under 50%. There are some exceptions that can be made but staying below 50% is most desirable and results in better terms for your loan. As opposed to Conventional loans, which require a much lower debt/income percentage.

  • Both FHA and Conventional have their pros and cons. The mortgage market and landscape changes constantly so there is no flat answer to this. Each scenario is different, and it may make more sense to use FHA vs Conventional at times. If you qualify for both, it is best to work with your Loan Officer and compare the two.

  • Yes, all FHA loans have PMI and the only way to remove it is to refinance to a Conventional loan once the equity position in the house allows for that.

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