Summary

Federal Housing Administration (FHA) home loans are mortgages that are insured and backed by the federal government. FHA mortgages were designed to assist borrowers who would otherwise not qualify for conventional financing due to credit and down payment requirements. FHA does not actually create these mortgages, rather it provides insurance payments to allow private lenders that are FHA-approved to issue these mortgages and help more borrowers obtain financing for a home. FHA loans are designed to make owning a home more affordable for those who may have struggled with credit in the past. It’s also a great option for borrowers that don’t have a large enough down payment to obtain a conventional loan. FHA Loans can be used to purchase a new home or refinance an existing home. The streamline refinance option also allows borrowers to refinance their existing FHA mortgage with less documentation than a traditional FHA or conventional refinance.

Advantages to FHA Loans

  • Many Credit Challenged Borrowers Qualify - FHA Loans allow borrowers with major financial hardships such as a bankruptcy or a foreclosure to qualify. There is also no minimum credit score requirement so long as borrowers have compensating factors that would support a new mortgage.
  • First Time Homebuyer Friendly - FHA loans allow for a minimum 3.5% down payment which helps first time buyers without significant savings to qualify. Gifts can also be used for the entire down payment effectively making home ownership with no previous savings achievable.
  • Lower Rates Than Conventional Loans - FHA Loans typically have lower rates than conventional loans. This helps offset the cost of the monthly mortgage insurance and makes conventional and FHA mortgage payments comparable.
  • All Property Types Can Be Financed - FHA loans can be used on single-family residences (SFR), 2-4 unit homes, condos, and manufactured homes.
  • Reduced Mortgage Insurance Premiums (FHA MIP) - FHA loans have undergone significant changes over the last few years which have lowered the FHA MIP making mortgage payments even that much more affordable.

FHA Loan Requirements

In order to obtain an FHA mortgage, you will either be looking to purchase a home in the near future or refinance a home that you currently own.  If you are looking to make a new home purchase, the first step of this process is to get pre-approved.  If you are looking to refinance your home, the requirements will differ slightly from a purchase.  Speaking to one of our licensed loan officers will give you the education you need to make an informed decision so you can get your current mortgage refinanced.

FHA Loan Options

  • Adjustable Rate Loans - FHA offers both 3/1 and 5/1 ARMS so you can choose the rate that best fits your financial goals.
  • Streamlined Refinance Option - Refinance your existing FHA loan with less documentation than standard refinances.  Appraisals and income documentation are not needed to qualify making this loan a super simple process.
  • 203k Renovation Loans - Get the money you need to remodel your home during the home financing process.  This is a great tool for borrowers who would like to purchase a fixer-upper or make upgrades to their existing home.

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