If you have little or no money available for a down payment, poor or fair credit and feel like you have way too many bills,
FHA may be your key to homeownership today.
FHA does not loan money to borrowers, they simply insure loans. You don't go to the FHA to get a mortgage. You can go to any mortgage company that has been approved by the FHA to underwrite these FHA government-insured loans.
The program works and provides incredible options for borrowers whose only choices in the last few years have mostly been high interest subprime mortgage loans.
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Whether you are a first time homebuyer with less than perfect credit or you are
buying your second home, FHA loans are a great solution for borrowers looking
for a good rate with a small down payment. Continue to our
online FHA application to get up to 4 free offers.  |
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There are many advantages to an FHA loan:
- You are only required to put down a 3% down payment and the lender can help you get it. It can also be gifted from a close friend, a relative or a non-profit organization that provides financial assistance.
- You can have less than perfect credit. In fact, your credit can be pretty bad. FHA is far less concerned about your credit score than they are your history over the last two years in paying your bills on time. They will often ignore previous financial troubles and other blemishes on your credit report.
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There are no "set" guidelines about credit, which allows much more flexibility at the underwriting level.
Some of the FHA guidelines are stricter:
- You do have to be two years out of bankruptcy from the date of discharge and you must have some re-established credit to get an FHA loan.
- If you had a foreclosure in your past you typically need to wait at least three years before becoming eligible for an FHA loan and your credit report should be fairly clean after that date.
The FHA has many different choices of loan programs like 30-year fixed, 15-year fixed, 1, 3, 5, 7, and 10 year ARM's too. Interest only options are not available.
In today's market, there are a lot of bank-owned properties on the market that are in need of substantial repair.
The FHA has a program which allows owner-occupied borrowers to finance up to $35,000 in the mortgage to make these repairs.
FHA loans allow you to purchase a single family home or a duplex. FHA will even insure loans on manufactured and mobile homes.
Rates on conventional loans are usually based on credit score. The better your credit score, the better your rate. This is not true with FHA loan programs. Everyone,
This FHA program is called a 203(K) and it allows for the appraiser to consider the value of the home after all of the repairs and renovation is made. And you still only have to put 3% down.
No other loan program in the mortgage industry allows for this.
In today's market, the only downside to an FHA loan are the loan limits, which are vary by county, and that unless you put down 20%, your FHA loan will require mortgage insurance.
Mortgage insurance (MI) is handled a little differently with FHA than with a conventional loan. For one, it's usually a bit cheaper. FHA mortgage insurance is not based on credit score like conventional loan MI. It typically runs 0.5% of the loan amount and is spread out over your monthly payments.
FHA loans typically also have an upfront insurance premium that is 1.5% of the loan amount. This premium is due at the close of escrow and can either be paid in full at the closing or financed into the loan amount.
The good news here is that
FHA mortgage insurance was recently made tax-deductible,
so that helps trim the costs of mortgage insurance down.
The bottom line is if you are a first-time homebuyer or you are a bit more credit-challenged and your lender suggests a subprime loan you should ask for FHA as an option.
If your potential lender says FHA is not for you for any other reason other than loan amount or income documentation and suggests a subprime mortgage loan, you may want to get information from a different lender.
A professional consultant is always available at Loan Choice Direct, so please call us (1-888-523-8523) today to find the best solution for your needs.
You can also apply with our
quick and easy FHA application and one of our financial consultants will get in touch with you shortly.
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Looking for an FHA home loan? Apply Online Now to get up to 4 free quotes to find a great rate. Loan Choice Direct can even help you refinance your existing mortgage to lock in a great fixed rate with an FHA Streamline Refinance.
Continue to our
online FHA application to get up to 4 free offers. |
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