Loan Options
FHA loans, explained.
Not every homebuyer has perfect credit, a large down payment, or a long financial history. That is okay. FHA loans were designed to make homeownership more accessible for buyers who need a little more flexibility. For many borrowers, an FHA loan is the difference between waiting years to buy and getting started sooner.
Check If You QualifyLenditHome Powered By Alpha Home Lending, Inc.
Serving Utah, Florida, Idaho, Pennsylvania, and Texas.
How FHA loans work.
The insurance behind the loan is what makes the flexibility possible.
The Federal Housing Administration does not lend money directly. It insures the loan. That insurance reduces risk for lenders, and it allows them to offer more flexible qualification standards.
Because the loan is insured, borrowers may benefit from:
- Down payments as low as 3.5%.
- More flexible credit requirements.
- Higher allowable debt to income ratios.
- Competitive interest rates.
- The potential to finance some closing costs into the loan.
FHA loans are for primary residences. The home must be the borrower's main place of living.
FHA loan requirements.
FHA loans require many of the same documents as other mortgage programs.
Lenders typically review four things. Your employment history, your credit profile, your debt to income ratio, and a home appraisal.
- Minimum down payment can be 3.5% with qualifying credit.
- Lower credit scores may still qualify depending on the overall financial picture.
- The loan must be used for a primary residence.
Every borrower's situation is unique, so lenders may request additional documentation during the review process.
Mortgage insurance for FHA loans.
FHA loans include two types of mortgage insurance. They protect lenders and keep the program accessible to borrowers.
Upfront Mortgage Insurance Premium
1.75% of the loan amount. This premium is typically financed into the loan.
Annual Mortgage Insurance Premium
Approximately 0.55% per year. It is paid monthly as part of the mortgage payment.
These premiums support the FHA insurance fund, which protects lenders if a borrower defaults.
Best fit for an FHA loan.
- Buyers with higher debt to income ratios.
- Borrowers with less than perfect credit.
- Buyers with smaller down payments.
- Homebuyers with limited home equity when refinancing.
Considerations.
Both mortgage insurance premiums are part of the cost. Weigh the upfront premium and the ongoing monthly premium against the easier qualification. For many buyers, the trade is worth it. For some, a conventional loan costs less over time.
LenditHome Powered By Alpha Home Lending, Inc. is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.
Want to see if an FHA loan could work for you?
Every borrower's situation is different. Run a quick scenario and explore FHA and other loan programs in just a few minutes.
Check If You QualifyPrefer to talk? Call Austin at (208) 821-0687.