FHA Home Loans
FHA loans are mortgage loans insured through the Federal Housing Administration (FHA). These mortgages make home ownership much more affordable and have easier credit requirements that are perfect for first time homebuyers, families with lower credit scores or with low to moderate incomes.
Created in 1934 as a response to loss of ownership and foreclosures, The Federal Housing Administration was created to insure mortgage lenders while helping the housing industry grow. Thus, creating an affordable mortgage loan option.
With a down payment requirement as low as 3.5% and a FICO credit score of at least 580, a borrower can qualify for financing with an FHA loan on owner occupied homes. If a borrower has a credit that is lower than 580, The FHA may still allow financing with a 10% down payment. FHA home loans come with two types of mortgage insurance premiums when borrowers have a down payment that is less than 20%.
First Time Homebuyers, families with low to moderate incomes, bankruptcy or previously foreclosed borrowers may be able to qualify for a mortgage even with a financial standing that is less than perfect. Often with lower interest rates and mortgage payments.
WHAT TO PROVIDE YOUR LOAN OFFICER:
Borrower’s Payment History
2 Years of Financial and Work History
MORTGAGE INSURANCE TYPES REQUIRED BY FHA LOANS:
Upfront Mortgage Insurance Premium (UFMIP) – Is an annual premium amount required by the lender at 1.75% of the loan amount. This amount is required at the time of closing.
Annual Mortgage Insurance Premium (FHA MIP) – Is an annual insurance premium that is paid monthly through the mortgage payment and is calculated by the term of the loan and the down payment.
Additional FHA Options:
FHA Reverse Mortgage Loans – This loan allows a senior to access a portion of the equity in their primary residence to use the tax-free proceeds as they see fit. The senior retains the ownership of the property. The loan will continue as long as the senior(s) live in the home as their primary residence and meet terms of financing instruments. This loan option may also be used to purchase a new primary residence.
203 (k) FHA Loans – There are FHA loans available that are perfect for borrowers wishing to make additional repairs to their homes. The loan amount is not based on the current appraised value of the home but on the projected value of the home expected once the repairs are completed.