An FHA loan is a loan that is a home loan that the Federal Housing Administration insures. FHA loans require smaller down payments and lending standards are more relaxed to help borrowers who do not qualify for a conventional mortgage.
Here is what you need to know:
FHA loans are designed for borrower’s with lower down payments and lower credit scores.
Credit scores as low as 580 can qualify.
The minimum down payment is 3.5%.
FHA loans have a mandatory 2 part mortgage insurance: The first part is an upfront mortgage insurance premium also known as an FHA funding fee, which is 1.750% of the loan amount. The second part is an annual mortgage insurance that borrower’s are required to pay as part of their monthly payment. The rates are dependent on your loan term and down payment.
Unlike a conventional mortgage, the FHA monthly mortgage insurance remains for the life of the loan.
To see if a FHA mortgage is right for you or for more information, pleasecontact us!