What is an FHA loan?
FHA Loans have been helping people become homeowners since 1934. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties. Borrowers with these loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. Borrowers can qualify for an FHA loan with a down payment as little as 3.5% and a credit score of 580 or higher.
The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable for people with less than stellar credit or a low down payment.
Who are these loans ideal for?
- First time home buyers: FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price. Available on 1-4 unit properties.
- Financial help for seniors: Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer “yes” to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
- Energy efficiency: You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.
Some of the FHA Loan Requirements:
- Must have a steady employment history or worked for the same employer for the past two years.
- Borrowers must have a valid Social Security number, lawful residency in the U.S and be of legal age to sign a mortgage in your state.
- Borrowers must pay a minimum down payment of 3.5%.
- New FHA loans are only available for primary residence occupancy.
- Borrowers must have a property appraisal from a FHA-approved appraiser.
This is a general overview of a FHA Loan, if you have more questions please contact us today!
