FHA Loan Lending

What are the requirements for an FHA loan?

FHA loans are insured by the Federal Housing Administration (FHA), which means that the government backs the loan if the borrower defaults. This makes FHA loans a good option for borrowers with less-than-perfect credit or who don't have a large down payment.

To qualify for an FHA loan, you must meet the following requirements:

• Credit score: Generally, you must have a credit score of at least 580.
• Down payment: You must make a down payment of at least 3.5% of the purchase price of the home.
• Debt-to-income ratio: Your monthly debt payments, including your mortgage, must not exceed 50% of your monthly income.
• Property requirements: The home you purchase must meet FHA property requirements. These requirements include things like the home's age, condition, and location.

Benefits of an FHA loan

FHA loans offer several benefits, including:

• Lower down payment: FHA loans allow borrowers to purchase homes with a down payment as low as 3.5%.
• Less-than-perfect credit: FHA loans are available to borrowers with credit scores as low as 580.
• Flexible income and debt-to-income ratios: FHA loans have more flexible income and debt-to-income ratios than conventional loans.
• Mortgage insurance: FHA loans require borrowers to pay mortgage insurance premiums (MIP). MIP is typically 1.75% of the loan amount and is paid monthly. However, MIP can be canceled once you have 20% equity in your home.

Drawbacks of an FHA loan

FHA loans also have some drawbacks, including:

• Mortgage insurance: FHA loans require borrowers to pay mortgage insurance premiums (MIP). MIP is typically 1.75% of the loan amount and is paid monthly.
• Property requirements: FHA loans have property requirements. Homes must be in good condition and meet FHA standards.
• Borrower limits: FHA loans have borrower limits that vary by county.

If you are considering buying a home and you don't have a large down payment or perfect credit, FHA financing may be a good option for you. However, it is important to understand the benefits and drawbacks of FHA financing before you decide if it is right for you.

Here are some additional tips for borrowers who are considering an FHA loan:

• Get pre-approved for a loan before you start shopping for a home. This will give you an idea of how much you can afford and will make the home buying process go more smoothly.
• Compare rates and terms from a mortgage broker that works with multiple wholesale lenders. FHA loans can vary in terms of cost, so it is important for your Mortgage Loan Originator to have the ability to shop around to get the best deal.
• Be prepared to pay a mortgage insurance premium (MIP). MIP is typically 1.75% of the loan amount and is paid monthly.
• Make sure the home you are buying meets FHA property requirements. Homes must be in good condition and meet FHA standards.

If you are considering an FHA loan, be sure to work with a qualified mortgage broker like Tried & True Home Loans who can help you understand your options and find the right loan for your needs. APPLY ONLINE