Federal Housing Administration (FHA) Mortgage Loans

Federal Housing Administration (FHA) Mortgage Loan

FHA Loans are known for their flexibility of lending standards to qualify first time home buyers. (Remember if you haven’t owned your own home in three years, you are considered a “first time home buyer”.) The mortgage loan is insured by The Federal Housing Administration. This program was developed to help American’s achieve the dream of home ownership by offering a 3.5% down payment program. The target group of people that are helped by this program often have lower credit score and less cash on hand for up front closing cost. FHA is typically the only mortgage option for people with a high debt to income ratios. They may sound too good to be true but, the reality of this loan is that, it comes with two mortgage insurance premiums. There is the initial hit of 1.75% of the loan amount due at closing, as well as, an annual premium of 0.8% of the loan. Click here to read more about FHA loans from HUD. FHA loans often have many requirements when dealing with paperwork for the lending institutions and can take up to 45 days to close. There are certain requirements as to whether a property will qualify to be insured by FHA. The home must be “move in ready”; no chipping paint, good foundation, no cracked windows, no plumbing issues, and several other requirements. Click here for more information from Investopedia on current property requirements on FHA properties. FHA mortgages also require an appraisal provided by a FHA approved appraiser. A good lender will look at all loan options for what best fits your individual needs and provide you with their recommendation. We deal with FHA mortgages on a regular basis and would be happy to answer any questions you may have regarding this type of loan program.