An FHA Loan is a great option for home buyers who don’t meet the income, credit, or down payment requirements for traditional, conventional loan programs.
FHA Loans are insured by the Federal Housing Administration and FHA Borrowers are required to make Upfront and monthly Mortgage Insurance payments. The FHA recently reduced the cost of Mortgage Insurance. However, MI is now for the life of the loan for borrowers that do not meet down payment amounts specified by FHA.
The Department of Housing and Urban Developments makes periodic changes to FHA guidelines and requirements. It is therefore advisable to consult with your Loan Officer for the most current rates and terms on FHA loans.
Other factors to consider:
- Currently, FHA Borrowers must make a minimum down payment of 3.5%. This money can be gifted by a family member.
- Credit score requirements are lower for FHA loans. Your Loan Officer will discuss minimum scores with you when they pull your credit report.
- FHA loans are only available for Primary Residence occupancy, and an FHA loan requires that the property meets certain standards at appraisal. There are also maximum mortgage limits for FHA loans that vary by State and County.