An FHA (Federal Housing Administration) loan is a loan insured by the US Government against default.
In other words, if a borrower stops making mortgage payments and defaults on their loan, the FHA will repay the mortgage company its losses on the loan. This insurance by the government makes the FHA a very popular and important mortgage loan program to help those with lower credit scores and down payments achieve homeownership.
FHA Loans: An Affordable Path to Homeownership
Watching your dreams of homeownership vanish because of credit problems or limited savings? Conventional mortgages often demand impeccable credit records or substantial down payments that could take years to amass, leaving deserving buyers to the side as house prices just continue to increase. FHA loans are available when conventional financing closes the door, offering flexible credit terms and down payments as low as 3.5% to help you achieve homeownership on your terms, not the bank's.
Your Accessible Financing Solution
Federal Housing Administration (FHA) loans are designed to help buyers who run into roadblocks with conventional mortgages. You have a minimum credit score of only 580 for the lowest down payment, just 3.5% down to qualify, and you could purchase a $200,000 home for just $7,000 down instead of the $40,000 that a conventional loan might ask for.
These government insured mortgages level the playing field for working-class families who qualify to own a home but don't fit neatly into strict boxes that conventional loans require.
Who can get an FHA Loan?
Almost anybody can get an FHA loan. There are no income limits and it will provide financing on 1-4 unit residential properties to be used as primary residences. However, there are limits on how much you can borrow based on where the property is located. To qualify for an FHA loan, you’ll need a minimum 580 credit score and maximum debt to income ratio of 43% (exceptions made up to 55% with compensating factors). The interest rate and closing cost structure of the FHA loans are best suited for clients with less than perfect credit score and low down payment/equity.
Advantages That Apply to Real-World Situations
FHA loans deliver advantages that reflect the actual concerns buyers are facing in the current marketplace:
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Low down payments of 3.5% make home ownership attainable quickly
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Flexibility with credit scores for buyers with less than perfect credit or establishing credit
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Higher debt-to-income ratios allowed than conventional loans
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Gift funds accepted to use for down payment and closing costs
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Assumable loans that can be passed on to future buyers
We are experts at helping buyers leverage FHA benefits to overcome hurdles and achieve dreams of homeownership.