When you buy a home, the Federal Housing Administration will guaranty a portion of your loan. As part of HUD, the FHA has insured millions of loans since 1934. By providing mortgage insurance to protect the lender in case of default, the FHA enables more lenders to offer loans to more homebuyers than any other mortgage program. More borrowers and first-time homebuyers choose FHA mortgages when they morneed:
- Easy credit guidelines and qualifications
- Lower closing costs
- Flexible and low down payment options
- You can purchase a 1-4 family primary residence or condo with as little as 3.5% down.
- You can purchase manufactured housing with an FHA loan in addition to mobile homes, whether you own the land or it’s in a mobile home park.
How FHA Mortgage Insurance Works
- Keep in mind that FHA is a mortgage insurer and not a lender.
- You’ll pay an upfront mortgage insurance premium of 1.75% of your total loan amount. The upfront premium can be included in your loan.
- You’ll also pay a mortgage insurance premium along with your monthly mortgage payment. The amount varies with your down payment and term of the loan. Your loan consultant at MortgageDepot can give you more details and provide you with a quote on you estimated mortgage premium payments.
Benefits of FHA Mortgages
- Relaxed Credit Guidelines. With a credit score of only 500, you can qualify for an FHA loan.
- Flexible Down Payment. Your down payment can be as little as 3.5% of your purchase price with a credit score starting at 580. You’ll only need a 10% down payment with scores as low as 500.
- Closing Costs. FHA allows your seller or builder to pay a portion of your closing costs for appraisals and inspections, credit reports, and title company services.
- Include Repair and Upgrade Costs. With the FHA 203k Rehabilitation Loan, you can borrow additional amounts to do both structural and nonstructural repairs and modifications. Choose the FHA Energy-Efficient Mortgage which allows you to add the cost of energy improvements to your loan.
- Flexible Rates and Terms. FHA loans carry attractive interest rates on both fixed and adjustable-rate mortgages. Some popular options or 30 year fixed and 5/1 ARMs. Ask your FHA specialist which repayment term is right for you.
At MortgageDepot, we work with several FHA approved lenders to offer the most flexible FHA loan options. Call us for a quick phone consultation or fill out our quick quote request. One of our FHA loan consultants will shop for the best FHA program to suit your credit and income situation.