FHA Loans

Currently, one in five mortgages issued are FHA loans. This means that the loans are insured by the Federal Housing Administration (FHA). FHA loans are similar to conventional, but are easier to obtain for individuals who have less-than-perfect credit or who are not able to make a large down payment.

FHA Loan Information

The FHA loan insurance helps protect the lender in the event that the loan goes into default. This insurance makes the lender more likely to offer more favorable terms and interest rates to the borrower.

FHA Home Loan Facts

Because FHA home loans are one of the safest loans on the market, they can help make the dream of home ownership a reality for many people. A few FHA loan facts you should know:

• FHA Loan Fact: You can finance up to 96.5% of your new home purchase with an FHA home loan.
• FHA Loan Fact: FHA home loans do not have pre-payment penalties. You can pay off your FHA loan at any time without worrying to pay a penalty.
• FHA Loan Fact: FHA home loans can have a fixed rate or adjustable rate. This provides you with the flexibility to choose your options.
• FHA Loan Fact: FHA home loans have a streamline option which allows borrowers to take advantage of positive changes in interest rates.

FHA Home Loan Refinance

People can refinance their home loan for many reasons. The most common reasons to refinance with an FHA loan are:

• Get a lower rate
• Change from an adjustable rate to a fixed rate
• Consolidate debt
• Get money for repairs
• Take advantage of additional equity
• Combine two mortgage into one
• Use the streamline option to lower the interest rate on an existing FHA home loan

FHA Home Purchase Loan

More and more people are using FHA loans to purchase a new home. FHA loans are especially useful for first time home buyers because they require only a 3.5% down payment.

Another type of FHA home purchase loan is the FHA 203(k) program. This program allows FHA loan borrowers to obtain up to $35,000 above the purchase price to make improvements or upgrades to the property, including:

• Replacement or repair of roofs
• Replacement of gutters
• Electrical or plumbing repairs
• Minor remodeling projects
• Energy efficient upgrades
• Accessibility upgrades

FHA Loan Eligibility

To be eligible for an FHA home loan, the home must be your primary residence and you must have a reasonable credit history. You must also have an acceptable debt to income ration in order to be approved for an FHA loan.
FHA loans can only be granted on FHA approved properties. FHA-approved properties include:

• 1-4 unit properties
• Manufactured homes that were built after June 15, 1976 and that are on permanent foundations
• Eligible condos
• Eligible cooperatives