FHA Loans

FHA loans make homeownership possible for many people and may be beneficial to borrowers with various needs. Because FHA Loans are insured by the Federal Housing Administration, homebuyers have an easier time qualifying for an FHA loan. Those who typically benefit most by an FHA loan are first-time home buyers with lower down payment and/or borrowers who have less than perfect credit. As FHA Loan specialists we can help you understand the details of FHA loan program and create a customized solution that works best for you and your family. Please contact us to learn more about FHA loans.

 

Insured by Federal Government

In all actuality the Federal Housing Administration (FHA) doesn’t lend any money, rather they insure the performance of the loan for the lender. This means that you’re considered to be a less risky borrower than someone who might not have the backing of the federal government.

FHA Loan Benefits

FHA-insured mortgages can help more people get into a home, and may be the best available option for certain borrowers. Here are some of the basic benefits of an FHA mortgage:

  • Easier to qualify for: because they are backed by the federal government lenders are more likely to give you the kind of loan that you need.
  • Low Down Payment: FHA-insured mortgages only require a 3.5% down-payment on 1-4 unit primary residence which makes it easier for people to own homes. Additionally the 3.5% can come in the form of gifts, unlike many other loan programs.
  • Lower Credit Borrowers Qualify: because FHA-insured loans are backed by the government, those with a poor credit history have an easier time getting this kind of loan.
  • Better Interest Rates: with the backing of the government these loans often have better interest rate than most traditional mortgage loans, especially for lower credit scores.
  • Make the new Home Energy Efficient: FHA Energy Efficient Mortgage allows including costs of energy efficient improvements into the loan (up to a certain limit) and expands maximum allowed debt ratios to make it easier.

FHA Loan Qualification

Qualifying for a home mortgage loan can be difficult, near impossible without a sizable down payment and a moderate credit report. If this describes you and you financial position, an FHA loan may be for you! There are fewer restrictions for FHA loan qualification in comparison to a standard mortgage loan. Basic qualifications for an FHA loan are (certain situations may require additional documentation):

  • Two year employment history (school attendance can be included for these purposes)
  • History of on-time payments
  • If you've filed for bankruptcy you must wait at least 2 years and have good credit since you filed.
  • Those with foreclosures must wait at least 3 years since the most recent foreclosure.
  • Monthly total mortgage payment should not exceed 31% of your gross income.
  • You must pay a minimum of a 3.5% down-payment.
  • Single-family homes, condominiums and 2-4 unit properties are eligible
  • The property must be your primary residence
  • Upfront and monthly Mortgage Insurance Premiums (MIP) set by HUD apply

FHA Loan Checklist

When you are applying for an FHA loan the following list of documents will help expedite the process. We can help you understand any part of the FHA loan process so don't hesitate to contact us with any questions.

Employment Info

  • Past two years W-2's
  • One month worth of newest pay stubs
  • Past two years completed Federal tax returns if self-employed
  • If applicable, two years of business Federal tax returns and YTD Profit & Loss Statement

Savings Info

  • Past two months full bank statements for all accounts
  • If applicable, recent statements from investment accounts (retirement, 410k, mutual funds, etc.)

Personal Info

  • Driver's License or other official State identification
  • Social Security Card
  • If applicable, any Divorce, Palimony, Alimony Documents
  • If applicable, Green card or work-permit

FHA Frequently Asked Questions

What exactly is FHA?
FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans get into homes.

What makes a FHA-insured mortgage beneficial?
A FHA insured mortgage is easy to qualify for, can be obtained with less than perfect credit and requires a smaller down-payment.

Where can I find FHA forms and other literature?
A great source for FHA forms and information is https://www.hud.gov/topics/buying_a_home.

What is the FHA loan limit in my area?
The loan limit depends on the geographical area. Click here to see limits in your area.

Can I pay an FHA loan off early?
Yes, however be sure to check the pre-payment section of your contract before signing.

Can a FHA insured loan help me lower energy costs?
Yes, through the Energy Efficient Mortgages Program you can finance 100% of the cost of making your home more energy efficient. Contact us to see how.

Can I refinance a fixed rate FHA loan?
Yes. Speak with one of our professionals today to see if refinancing makes sense for you.

What is the maximum debt-to-income ratio for FHA loans?
Generally, 43%, but can be higher in certain cases.

Are FHA loans assumable?
Yes, you can assume an existing FHA loan or allow a buyer to assume yours, but creditworthiness review of the assumptor may be required.

Will I have to pay mortgage insurance with an FHA loan?
Yes, in fact FHA mortgages often require you to carry mortgage insurance for longer than most conventional loans.

Can I get a "fixer-upper" home with a FHA mortgage?
Yes, however you might be required to fix certain problems in the home before you can get the full loan. Speak with us today for details on this.