FHA Loans Guide

An FHA loan is a mortgage option backed by the federal government. Even if your credit score isn’t top-notch, you may still qualify for this low-cost option. 💳 Plus, with a down payment as low as 3.5% (or even 0% for qualifying VA applicants), it’s easier to make your dream of homeownership a reality.

Back in the Great Depression, the Federal Housing Administration (FHA) was established to give Americans a shot at homeownership. 🏠 At a time when getting a home loan was nearly impossible, the FHA stepped in to make it easier by reducing the minimum down payment requirements and credit score requirements. 💰 Plus, with more attractive mortgage rates, more people were able to afford a home.

Today, the FHA is still going strong and continues to help people become homeowners. It’s amazing to see how far the FHA mortgage itself has come since its creation, and we’re proud to be a part of this rich history.

Are you interested in buying a home but feeling overwhelmed by the conventional loan process? Then you might want to consider an FHA loan! 🏠 These loans offer a variety of options to meet the unique needs of different borrowers. Plus, with relaxed requirements and more accessible terms, they make homeownership a possibility for those who may not otherwise qualify for a conventional mortgage.

When it comes to loan duration, you’re in control. You can choose a term that works best for you, with a maximum loan term of 40 years. And when it comes to loan limits and amount, FHA loans have you covered. The maximum loan limit is determined by the property type and local cost of living, with current loan limits, ranging from $420,000 to $1.2 million.

No need to wait for a perfect credit score to buy your dream home. With an FHA loan, you can start building equity sooner! 💰 Here’s what you’ll need t qualify for an FHA loan:

So, why wait? Start your journey towards homeownership with an FHA loan!

No matter what type of real estate you’re interested in, an FHA loan can help make your dream a reality for qualified applicants! 

If you’re thinking of buying a home, it’s important to know the difference between FHA mortgages and conventional mortgages. This can help you decide which one to go for and get you into the home buying market sooner.

The key difference between the two is that FHA loans are easier to qualify for as they are backed by the federal government. While these loans were originally designed for low to middle-income borrowers, anyone can apply for one, including those who could qualify for a conventional mortgage.

They can be a great option if you don’t have a perfect credit score, as you may still be eligible with a minimum score of 500. But, to get the best financing and a 3.5% down payment, aim to have a credit score over 580. On the other hand, conventional loans usually require a more minimum down payment and a higher credit score of 620 or higher, and you may have to pay mortgage insurance if your down payment is less than 20%. With lower credit scores, mortgage insurance becomes prohibitive, and much more costly than FHA mortgage insurance. 

Interest rates on FHA loans are usually lower as they are insured by the government, meaning they carry less risk for the lender, and they require mortgage insurance for the entire lifetime of the loan. For conventional, average interest rates will depend on factors like your credit score, loan-to-value ratio, and debt-to-income ratio.

FHA loans come with mortgage insurance premiums (MIP) that you’ll have to pay, both at closing and in your monthly payment throughout the life of the loan. Conventional loans don’t require FHA mortgage insurance, but you may still have to pay for private mortgage insurance (PMI) if you make a down payment less than 20%. PMI can be cancelled once you have 20% equity in your home.

The type of property you want to buy can also impact which loan you choose. FHA loans come with restrictions on properties that don’t meet HUD standards, but repairs can be made to get funding for the purchase. For conventional loans, while they have many requirements, they usually don’t require a home inspection, but an appraisal is often needed.

FHA loans can only be used to purchase an owner-occupied primary residence and not investment properties or second homes. Conventional loans have fewer limitations and can be used to buy vacation homes, investment properties, and primary residences.

Are you thinking about getting a home loan? If so, you might want to consider an FHA-backed loan. They’re a great option for first-time homebuyers, especially if you have a lower credit score. Here are some pros and cons to help you weigh your loan options out:

So, you’re thinking about getting an FHA loan to buy a home? That’s great! Just one thing to keep in mind is your credit score. This little 3-digit number can have a big impact on your loan and the amount you’ll need for a down payment.

Here’s the deal – if you have a credit score of 580 or above, you can put down a mortgage payment as little as 3.5%. But if your score is lower, you may need to come up with a bigger down payment.

Want to make sure your credit score is in good shape? Here are a few low credit scores and tips:

When you’re looking to apply for a mortgage, mortgage lenders will check out your DTI (debt-to-income) ratio. Every lender is different, but usually, if you’re going for a conventional mortgage, your DTI can be as high as 50% (as long as your housing costs don’t exceed 47%). But if you’re going for an FHA loan, your overall DTI can be up to 55% (again, housing costs can’t exceed 47%).

Calculating Your DTI is Easy!

Many home buyers worry about all their debt, like student loans, and think it will stop them from getting a home loan. Don’t let that worry stop you from getting a consultation to see if you qualify for a home loan! A mortgage lender will calculate your DTI to get an accurate picture.

Here’s how to do it in 3 simple steps:

Keep in mind, if you’re self-employed, working part-time, or receiving income from other sources like overtime, bonuses, child support, etc., these may be factored differently. Your Loan Officer and Underwriter will review all of these. And remember, you can use Social Security income as well.

Applying for a home loan can be overwhelming, especially when you factor in all the expenses like the down payment, closing costs, and mortgage insurance premiums. But don’t let that discourage you from reaching your goal of homeownership! There’s help available in the form of down payment assistance programs.

Say goodbye to worries about down payments, and hello to your new home sweet home!

One option to help you come up with the down payment is by accepting gift money from a family member or friend. If you go this route, just make sure your benefactor provides a letter that includes their contact information, relationship to you, the amount of the gift, and a statement that no repayment is expected.

Unfortunately, no – FHA loans don’t allow personal loans to be used for the down payment. But there are other options to consider, like down payment assistance programs or gift money from loved ones.