Congress created the Federal Housing Administration (FHA) in 1934 when the housing industry had its back against the wall. At this time America was a nation of renters with only 1 out of 10 households owning a home. Mortgage terms limited a property's loan-to-value to 50% and had to be repaid between 3-5 years, including a balloon payment at the end. FHA has been helping home buyers afford a mortgage since the 1940's when they created programs for veterans and their families who didn't have a place to live. During the 1950's they sparked the production of millions of apartments for elderly, handicapped, and lower-income Americans.

During the 2008-2013 market crash, FHA played a massive role in keeping the housing market propped up. FHA continued to provide mortgage financing when other sources of financing and capital markets had seized up. FHA provided current and future home buyers with the opportunity to continue the American dream. FHA has a combined $1.3 trillion dollars in its insurance portfolio made up of over 8,000,000 mortgages. FHA continues to provide mortgages with lower interest rates and relaxed credit and income guidelines to further encourage people to become homeowners.

Types of FHA Loans:

• Home Purchase Loan
• Rate and Term Refinance/Streamline Loan
• Cash-Out Refinance Loan
• 203(k) Renovation Loan
• Energy Efficient Loan

FHA Loan Requirements:

• Minimum FICO is 500 (may vary by lender)
•  Minimum down payment of 3.5%
•  Housing expense/Debt to income: 45%/57% (with AUS approval)

Exploring FHA Loans

The FHA loan was designed to help low to moderate-income families have an opportunity to attain homeownership. It is a great option for home buyers that are limited on funds, have less than great credit, and for people who have high debts. The FHA insures the mortgage and is committed to paying the bank back if a homeowner defaults on the loan. Most first-time home buyers may find that an FHA loan is the most affordable mortgage option.

FHA Loan Limit

FHA loan limits vary by county and depend on both the number of units and the median home prices of a particular area. For instance, in a county where home values are low, the FHA loan limit will be low as well. On the contrary, FHA loan limits will be higher in counties where home values are higher. You can find your counties loan limits at: FHA Mortgage Limits

FHA Mortgage Insurance

As a safeguard and incentive to keep loaning out money, the FHA charges mortgage insurance on all FHA loans. Mortgage insurance is made up of two parts, an upfront premium as well as a monthly payment. The upfront premium is 1.75% of the loan amount and can either be paid upfront or financed and included in the mortgage. The monthly payment is .85% of the loan amount but can be lower if the borrower puts a bigger down payment. If the down payment is less than 10%, then the mortgage insurance will stick for the life of the loan. If the down payment is 10% or more, then the mortgage insurance can be canceled after 11 years.

Why should you choose an FHA Home Loan?

Whether you are a first-time home buyer or purchasing a new primary residence, FHA may be the right choice for you with its low down payment, low-interest rates, and flexible credit and income requirements. FHA also allows gift funds for the down payment and closing costs as long as its from a family member! Contact us today for more information.

Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. An FHA down payment of 3.5% is required. Borrowers who cannot afford a traditional down payment of 20% or can't get approved for private mortgage insurance should look into FHA loans.

• Fixed Rates
• Adjustable Rate Mortgage (ARM)
• 3.5% Down Payments
• Jumbo & Super Jumbo Loans
• Terms from 5 to 30 Years