FHA loans are designed to help first-time homebuyers and experienced homeowners alike by providing them with a low down payment option (as low as 3.5%). An FHA loan is guaranteed by the Federal Housing Administration (FHA). Because the FHA guarantees that loan, lenders are more willing to work with borrowers who may not qualify for conventional loans.
Almost anybody can get an FHA loan. There are no income limits. However, to qualify, you will need to have reasonable debt to income ratios and a credit score of at least in 500s. There are limits on how much you can borrow, which are generally the median home prices in your area.
The benefits of the FHA loans include:
- Single-family, multi-family, and many other types of homes may qualify
- Less than perfect credit may qualify
- May be easier to qualify for than a conventional loan
- Allows higher debt-to-income ratios than a comparable conventional loan
- Down payment as low as 3.5%
- Typically lower base interest rate than a comparable conventional loan
- No prepayment penalty
- An eligible donor can provide gift funds for 100% of the borrower’s closing costs and down payment
- Loan is guaranteed by the government
Although an FHA loan is a great help to some borrowers, it comes with certain limitations and may not be ideal for everybody. Depending on your personal situation, an FHA loan may or may not be right for you. Please contact me to learn more about FHA loans and see whether an FHA loan is ideal for your situation. As an independent mortgage broker, I represent you, and not any specific bank or mortgage lender, so I have greater freedom to find you the best mortgage for your needs at the most competitive rates.