FHA Additional Information
FHA Loan Overview
Overview
FHA Loan at a Glance
An FHA loan can be used to buy a house or refinance an existing mortgage. You can buy a house with a lower down payment than a conventional loan, or use a streamline refinance to refinance your current mortgage in order to lower your current payment, with less documentation than a traditional loan. For 2020, individuals may borrow up to 96.5% of the value of a home with an FHA loan, leaving only 3.5% of the home's value to put down.
Additional Information
What is an FHA Loan?
An FHA home loan is a mortgage insured by the Federal Housing Administration. These mortgages are backed by the federal government, which helps FHA-approved lenders extend home financing to buyers who are unable to qualify for a conventional home loan. The FHA doesn't issue mortgages, the agency provides insurance on mortgage payments, so more borrowers are able to attain home financing through an FHA-approved lender such as a bank. Mortgage insurance premiums are the cost of having the FHA guarantee your loan...
Qualifications
FHA Loan Requirements
Less than perfect credit is not disqualifying
Maximum financing available with 580 FICO
Low down payments
Gifts or grants allowed toward down payment
Sellers, builders, or lenders may pay some of borrower's closing costs
Higher home inspection standards
Those with a credit score between 500–580 may still qualify with 10% down
Self-Employed Borrowers: Two years of tax returns plus an up-to-date balance sheet and profit/loss statement are required.
Why FHA
FHA Loan Benefits
FHA loans enable more people to achieve home ownership by allowing borrowers who have less than perfect credit, no credit history, or who may have experienced some financial missteps, like a foreclosure or bankruptcy, to qualify. The program has become popular with first time home buyers and move up buyers because you can buy a house with a lower down payment and has more flexible underwriting standards.
Important Details
Other FHA Loan Considerations
Adjustable-Rate Mortgage (5/1 ARM)
5/1 ARM establishes a lower initial interest rate for the first five years, then the market determines your rate. Adjustable-Rate Mortgages typically have lower interest rates than fixed rate loans. Useful if you plan on selling your home in the near future.
Must be used for a primary residence — FHA loans cannot be used for investment properties or vacation homes.
Monthly housing costs (mortgage, insurance, taxes) should not exceed 31% of gross monthly income.
The property must be appraised by an FHA-approved appraiser.
The home must meet FHA minimum property standards; required repairs must be completed before closing.
Borrowers who have filed for bankruptcy must wait at least two years before applying.
Borrowers who have experienced a foreclosure must wait at least three years before applying.
Ready to explore your FHA loan options?
Apply Now