FHA Home Loans

FHA Loans

An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans. If you’ve fallen in a bad financial situation, then an FHA loan might give you a chance at homeownership.

FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.

Other Benefits of FHA Financing

  • Only a 3.5% down payment is required for FHA Programs
  • The down payment money is allowed to come from a family member, employer or charitable organization as a gift
  • Some closing costs can be financed
  • Lower monthly mortgage insurance premiums
  • More flexible underwriting criteria than conventional loans
  • FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage)
  • Loans are assumable to qualified buyers
  • Features a renovation program with a 3.5% down payment
  • Credit score as low as 500 (with a higher than 3.5% down payment)
  • Eligible Properties: 1-2 Unit buildings, single-family homes, manufactured homes on permanent foundations, and condos approved by HUD
  • Streamline refinance is reduced documentation with potentially lower MIP. Might qualify for reduced income, credit, and appraisal documentation

HUD has its own appraisal guidelines which are more strict and conservative than the conventional loan. If the property does not meet the guidelines you might not be able to obtain a loan.

FHA loans require an Upfront Mortgage Insurance Premium (UFMIP). Typically this is financed into the loan amount however it can be paid out at closing. Credit from the seller or lender can be used however the credit must cover the entire amount. Additionally, FHA loans require a monthly mortgage insurance premium (MIP). Generally, MIP stays on for the life of the loan unless you make a 10% down payment, then the MIP stays on for a minimum of 11 years.

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Whether you are looking to purchase a home, or refinance an existing mortgage, apply online today.

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