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FHA Loans

Home loans provided by the Federal Housing Administration (FHA) may make it easier for you to buy a home. For an FHA loan a down payment of 3.5% is required. Borrowers who cannot afford a traditional down payment of 20% or are unable to receive approval for private mortgage insurance may consider an FHA loan.

What Is An FHA Loan?

An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments. FHA loans are available for single family and multifamily homes. FHA loans allow individuals who may not qualify for a conventional mortgage obtain a loan, especially first time home buyers. These loans offer low minimum down payments, reasonable credit expectations, and flexible income requirements. The FHA doesn't issue loans or set interest rates, it just guarantees against default. 

Advantages of an FHA Loan

  • 3.5% down payment option

  • The down payment and closing cost may be gifted

  • A co-borrower who does not live at the residence can sign on the loan (i.e., a non-occupant co-borrower). The co-borrower must be an immediate family member or in an established relationship with the borrower

  • A higher debt-to-income qualifying ratio

  • Lower credit score requirements (down to 500 FICO with 10% down, otherwise 580 for 3.5% down)

  • Cash-out refinances qualify, up to 85% loan to value

  • The seller in the real estate transaction may pay up to 6% towards the buyer's closing costs

  • Loan prepayment penalties are not allowed

Elligible Properties

  • Detached one-to-four dwelling units, including manufactured homes

  • Semi-detached one-to-four dwelling units

  • Townhomes

  • Row houses

  • Condos that are in an FHA approved condominium project/community

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