FHA loans

FHA (Federal Housing Administration) Loans

The FHA (Federal Housing Administration) home loan is one of several government-insured loans. It has been offered by the Federal Housing Administration since 1934 according to HUD (U.S. Department of Housing and Urban Development). This loan type has helped over 40 million families in America purchase a home.

The FHA doesn’t lend money directly to home buyers; they insure lenders against losses that may occur from client default. Because of this, lenders have less strict requirements for borrowers.

Features

One of the features borrowers enjoy the most is the low minimum down payment. There is a 3.5% minimum which helps borrowers obtain a mortgage with a higher loan to value than most conventional loans. Additionally, your closing costs may be lower than a standard loan. Traditionally, FHA loans have been a popular choice for lower-income borrowers and first time home buyers.

Requirements

Typically, allow lower credit scores than Conventional loans. With FHA mortgages, a MIP (mortgage insurance premium) will be required in addition to your monthly payments, regardless of the LTV (Loan to Value Ratio). Mortgage Insurance Premium (MIP) is implemented to help lenders protect their interest when allowing borrowers to secure a loan with little cash for a down payment. The FHA requires an upfront MIP as well as an annual MIP, which is collected on a monthly basis.

Depending on the credit score of the borrower, we can offer either a fixed rate mortgage or an ARM (Adjustable Rate Mortgage). Also, you can pay your mortgage down at any time without getting pre-payment penalties (always check with your Loan Originator for specific guidelines).

 

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