A FHA Home Loan is a mortgage loan that is insured by the Federal Housing Administration (FHA) against default. It was created after a surge of foreclosures and defaults in the 1930’s to help stimulate the economy while providing Mortgage Lenders adequate insurance.
- Typically considered to be an easier loan to qualify for.
- Especially good for first-time homebuyers and for those who cannot afford a 20% down payment.
- FHA does not make loans or set interest rates rather, it insures loans made by Lenders.
- Minimum 600 FICO required
- 3.5% down payment
- Can be combined with down payment assistance programs to reduce down payment and/or closing costs
- Gift funds permitted
- Seller credit to buyers closing costs are permitted or up to 6% seller credit to buyer closing costs is permitted.
- Requires upfront and monthly mortgage insurance
- Available for single-family, multi-family homes, condos, PUDs and manufactured homes.
- Allows banks to continuously issue loans without much risk or capital requirements.
- Reasonable credit expectations and flexible income requirements.
- Available for both purchases and refinances
- Maximum loan amount vary by county, so call for full current details.