Let’s start with “What is FHA?”
FHA is the Federal Housing Administration, which is a part of
Department of Housing and Urban Development (HUD). FHA provides
mortgage insurance on loans made by FHA-approved lenders
throughout the United States and its territories. FHA insures
mortgage loans on single family and multifamily homes–up to four
units–including manufactured homes and hospitals.
What does that mean to you, the consumer? In layman’s terms, the
government is telling the lender to loosen up a little on the
underwriting of their loans and that they are covered for the
first 20% of the loan amount in case you default on your
mortgage loan payments. The government does charge the consumer
a mortgage insurance premium for protecting the lender. This
insurance premium is paid in two parts. A lump sum upfront is
charged and added on top of the loan amount along with a monthly
premium. This monthly premium amount is for the life of the loan
unless you put down more than 10% of the sales price or
appraised value, whichever is the lesser. Then this monthly
premium is payable for 11 years.
FHA mortgage loans are considered a first-time home buyer loan
program but is not really limited to first time homebuyers but
rather for those who are looking to purchase a home for their
primary residence.
FHA Mortgage Highlights
— Low Down-payments as little as 3.5%
— Liberal with credit history. Credit scores as low as 580 and in some special cases down to 500
— Better interest rates depending on credit scores
— Higher debt ratios depending on credit scores and other factors
— FHA mortgage loan limits have been changed in 2019 and vary from county to county
If you have any questions or would like further assistance,
please contact us directly and
we will try our very best to
help wherever possible.
Call us on 941-444-9240
