FHA Home Loans
MEET CHASE AND JESSICA
- First-time home buyers
- Lower credit scores
- Not much money for a down payment
- This loan will be a lot of their take-home pay
- Tired of high rent payments
- Ready to move away from landlords
- Not sure how this all works
- Just need a little help getting started
- They plan to live on the property
What is an FHA Loan?
An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration. These mortgages are designed for low-to-moderate-income borrowers. FHA allows lower minimum down payments and credit scores than many conventional loans.
As of 2020, you can borrow up to 96.5% of the value of a home with an FHA loan. Which means you’ll need to make a down payment of only 3.5%. You will need a credit score of at least 580 to qualify for FHA. If your credit score falls between 500 and 579, you can still get an FHA loan, however, you will need to make a 10% down payment. With FHA, your down payment can come from savings, a financial gift from a family member, or a grant for down-payment assistance.
FHA Key Takeaways:
- Federally backed, designed for low-to-moderate-income borrowers who may have lower-than-average credit scores
- Allow a lower minimum down payment and credit score than many conventional loans
- Issued by approved banks and lending institutions, who will evaluate your qualifications for the loan
- These loans come with certain restrictions and loan limits not found in conventional mortgages
An FHA might be right for you if:
- This is your first time buying a home, or if you’re a repeat homebuyer
- Your Credit Score is low
- You don’t have much money for a down payment (Minimum 3.5% of the purchase price, mortgage insurance is required)
- You’re looking to refinance a high-cost mortgage