FHA Loans

Most Common FHA Loans Questions

• What is an FHA Loan?

An FHA loan is a type of mortgage insured by the Federal Housing Administration. It requires a down payment as low as 3.5% and has less-restrictive guidelines and credit requirements than many other home loans. You can use FHA loans to buy, refinance or renovate a home.

 

• Do you have to be a first-time home buyer to qualify for an FHA loan? 

You do not have to be a first-time home buyer, nor do you have to be an experienced homeowner. Any qualified buyer can obtain FHA financing for an eligible owner-occupied property. 

 

• What is the difference between FHA and conventional loans?

An FHA loan has less-restrictive guidelines which can assist in qualifications compared to a conventional loan. FHA will allow lower credit scores, higher debt-to-income (DTI) ratio and lower down payment. FHA has a maximum loan amount that it will insure, which is known as the FHA County Loan Limit. These loan limits are updated annually. They are calculated and influenced by the median home sales price of a property type in that specific county. Click here to search your county- FHA County Loan Limits

 

• Do FHA loans have higher interest rates?

FHA loans typically offer lower rates than a conventional loan. This is because FHA loans are insured by the Federal Housing Administration. This insurance or guarantee reduces some of the risk associated with mortgage loans.

 

• Does FHA have additional fees and/or costs?

When obtaining an FHA loan, you will be required to pay a mortgage insurance premium, known as an Upfront Mortgage Insurance Premium or UFMIP. This additional financed fee is equal to 1.75% of the loan. In addition to this fee, you will be required to pay a monthly insurance premium. The length and the amount of the monthly premium will adjust based on the percentage of the down payment and will decrease each year based on the principal balance owed.

 

• How do you know if FHA is the best loan for me?

Everyone’s financial situation can be different due to numerous factors. Just because an FHA loan was right for your friend, colleague, or neighbor, does not necessarily mean it is right for you. To ensure you choose the loan that is right for you, it is important to speak with a mortgage professional to discuss your specific situation in detail. Contact me to begin this conversation.