FHA Home Loans

FHA Home Loans:

One of the most well known loan programs in the country is the FHA home loan program. The program started just after the great depression to enable more Americans to become homeowners. The National Housing Act of 1934 was the legislation that created the Federal Housing Authority (FHA).

After WW II the Federal Housing Authority was instrumental in assisting our veterans purchase homes as they returned from war.

Since 1934 the FHA home loan program has allowed over 40 million Americans to become homeowners and currently they have nearly eight million mortgages in their portfolio

FHA Home Loans For Purchase and Refinance Transactions:

A homebuyer or a current homeowner can obtain a FHA home loan. The program offers some unique features that make it standout amongst the other well known home loan programs. Mortgage rates for FHA home loans are generally lower than mortgage rates for Conforming loans however FHA home loans come with Mortgage Insurance (MI). 

What is Mortgage Insurance (MI)?

The first thing to understand when it comes to MI is that it's NOT your homeowners insurance. Homeowners insurance covers your home in case of fire or other disasters. 

It's also not your mortgage rate.

MI is an insurance policy that covers the lender for any losses in case you default on your mortgage. There is an up-front fee (that you pay at closing or it's rolled into the interest rate) and then you pay monthly with your mortgage payment.

FHA Loans To Buy A Home:

There are two great things about the FHA Home Loan program when you're buying a home:

  • Low down payment (3.5% of the purchase price)
  • Poor to Average credit is ok

If you have a 630 credit score and you want to buy a home for $200,000 then you only need $7,000 for a down payment to open the door to getting qualified under the FHA program.

You also need the obvious; employment and enough income to be able to afford the monthly payments.

FHA Streamline Refinance Program:

If you currently have a FHA home loan you are in luck. You have access to one of the best refinance programs in the country (provided you meet the basic qualifications). The main requirement is that your current loan is a FHA loan.

Benefits of the program:

  • No appraisal
  • No income documentation
  • Very fast closing

Who Should Consider the FHA Home Loan Program:

If you have a small down payment (or little equity) and/or less than perfect credit you may want to consider the FHA home loan program. If you have a big down payment and/or great credit the FHA home loan program may not be for you. 

When contacting a Loan Officer be sure to ask plenty of questions so that you are fully informed about your mortgage options.