FHA Loans Make Home Ownership More Affordable
The FHA (Federal Housing Administration) loan is one of several government-insured loans. 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. Traditionally, FHA loans have been a popular choice for first time home buyers.
FHA Loan FAQs
The FHA (Federal Housing Administration) is a government agency that insures mortgages, giving mortgage lenders the ability to give mortgages to people who might not qualify for conventional mortgages. To make it easier to get approval and buy a home, the down payment requirements for an FHA home loan are considerably lower than a conventional mortgage.
You can get an FHA home loan for as little as 3.5% down payment. That means to purchase a $200,000 home, you would only need a $7,000 down payment. THis makes the FHA home loan a great option for most first-time home buyers.
No. Since the Federal Housing Administration does not make loans directly, they work through a wide variety of FHA approved lenders. This ensures that you can work with the FHA mortgage lender of your own choosing.
Mortgage insurance protects the lender against the possibility that a borrower defaults on the mortgage and is is completely different from homeowners insurance. Mortgage Insurance gives mortgage lenders the confidence to originate mortgages to people with less than ideal credit backgrounds. With an FHA home loan, the borrower can pay for the mortgage insurance with an upfront payment and a small addition to their monthly mortgages payments.
A bankruptcy does not disqualify an applicant from qualifying for an FHA home loan, if the applicant has established a responsible payment history since the bankruptcy. It may however, take two years after the discharge of a Chapter 7 bankruptcy, and one year after the payout period for a chapter 13 bankruptcy to qualify.
How much can I expect to pay each month?
Calculate your potential new monthly mortgage payment in seconds with this handy calculator so you can make sure you have enough money left over each month for all your other expenses. Choose your rate and term—you might be surprised to see how affordable it is to own your home in less time than you thought. See how much interest you’ll pay over the life of the loan, and enter prepayment amounts to calculate their impact on your mortgage.
The Benefits of Using an FHA Loan
Low Down Payment
FHA loans puts home ownership in the reach of millions of because of the low 3.5% down payment requirement.
Flexible Credit Requirements
If your just establishing credit or your credit is less than perfect, you can typically qualify with an FHA home loan.
Fixed or Adjustable
Both fixed rate and adjustable rate mortgages are available and insured by the Federal Housing Administration.
Capped Payment Increases
ARM loans have a cap on how fast the rate can increase, which means that even if payments go up, there’s a limit.
Usually lower than conventional mortgage rates on conforming loans and borrowers with lower credit scores can still qualify.