An FHA Loan is a government backed mortgage insured by the Federal Housing Administration. It’s a popular choice for first time home buyers, and features attractive interest rates and less stringent qualification requirements. It can be particularly helpful for borrowers who are struggling to save for a down payment or have less than perfect credit.
Flexible Credit Requirements
Low Down Payments
Fixed Rate & ARM Options
Low Closing Costs
One of the best features of FHA loans is that you don’t need stellar credit to qualify. If you’ve had a credit mishap (or two) in the past and would like to purchase a home, an FHA Loan may be able to bring home ownership within reach. Working with a loan officer early in the process to prequalify can help you better understand your financing options.
Another popular feature of the FHA loan program is the low down payment requirements. We know that saving for a downpayment can be particularly challenging, especially for first time homebuyers, and that’s one of the reasons FHA loans are so popular. The FHA loan program has a minimum down payment requirement of 3.5% of the home purchase price.
Speaking of home purchase price, the Federal Housing Authority (FHA) sets a maximum mortgage limit for FHA loans. The maximum varies by state and county (and number of units), and will generally be greater in more densely populated urban areas. To view the FHA loan limit in your area, you can visit the HUD website.
Buyers exploring an FHA loan should be aware that there is a monthly mortgage insurance premium for FHA loans that will last the life of the loan. Your loan officer can work with you to make sure you understand all of the costs of the loan.
Interested in learning more about FHA loans? Please call a HomeVantage loan specialist at (512) 592-3840.
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Frequently Asked Questions
What is an FHA Loan?
In 1934, the Federal Housing Administration (FHA) was established to improve housing standards and to provide an adequate home financing system. Families that may have otherwise been excluded from the housing market could finally buy their dream home.
An FHA loan is a mortgage that is insured by Federal Housing Authority. The FHA does not make the home loans, rather it insures the loan. Should a homebuyer default, the lender is protected from loss.
FHA Loans vs. Conventional Home Loans
The main difference between an FHA Loan and a Conventional Home Loan is that an FHA loan requires a lower down payment, and the credit qualifying criteria for a borrower is not as strict. If you have a nontraditional credit history, or minor credit problems an FHA loan may be a viable option to help you purchase a home.
Can I get an FHA loan if I've filed for bankruptcy?
Yes, generally a bankruptcy won’t preclude a borrower from obtaining an FHA Loan. Ideally, a borrower should have re-established their credit with a minimum of two credit accounts such as a car loan, or credit card. It’s important to work with a lender early in the home buying process if you’ve experienced a bankrupty in the past.
How much home can I afford?
While much of this depends on your personal financial situation and qualifying criteria, you should check out our How Much House Can I Afford Mortgage Calculator to run the numbers and explore different home buying scenarios.
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