| A FHA or Federal Housing Administration Mortgage does not provide borrower financing or set interest rates on home loans. The FHA does insure (which means less risk for the lender) the loan that the borrower secures from an FHA approved lender. Consult such a lender if you are in the market for an FHA loan.
What can a FHA home mortgage do? The federal housing administration loan can make your dream of homeownership come true. Generally, FHA home loans make it easier for applicants, even those with credit blemishes, to qualify for approval. FHA home mortgage programs allow for down payments of as little as 3 percent of the loan. The program even allows the borrower to accept the down payment amount as a gift from family or friends or from employer or charitable contributions. Because FHA home loans are insured by the Federal government they often feature lower, or at least very competitive, interest rates as compared to conventional loans.
Although credit history is a consideration, FHA home mortgage loans do rely on minimum credit scores when considering approval. In fact, even if you have had a bankruptcy it may be easier for you to qualify for an FHA home loan than it is to qualify for a conventional loan.
- FHA home mortgages can be used for the purchase of single family homes as well as dwellings that accommodate as many of four families.
- Federal Housing Administration Loans do not carry maximum income requirements. Lenders are primarily concerned with the borrower’s ability to repay the loan. Income may impact eligibility for down payment assistance programs. However, there are FHA loan limits so make sure you talk to a lender about the appropriate loan strategy.
Did you know you can apply for a FHA home loan even if you already have a home mortgage? If you are considering refinancing, why not consider an FHA fixed home loan? The advantages:
- Competitive interest rates
- Potential savings over your current fixed or variable rate mortgage
- Fixed payments for the life of the loan
- Offers more flexibility in calculating borrower income and payment expense than is available with a conventional loan.
- Creative solutions for borrowers facing financial difficulties – The FHA home mortgage program offers assistance through FHA National Servicing Center (NSC) that may help you avoid foreclosure.
FHA loan requirements include an upfront insurance premium payment as well as monthly insurance payments. Should the borrower choose, the initial payment may be financed; subsequent payments are added to regular mortgage payments. In most cases, borrowers can expect to discontinue premium payments after five years or when the loan balance equals at least 78 percent of the value of the property.
Final FHA Home Mortgage Tips:
- Consider a HUD approved Housing Counseling Center to help you find the best FHA loan options for your situation.
- Get a copy of your credit report from each of the three agencies before you apply for a loan.
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