What Is An FHA Loan?
FHA loans are insured by the Federal Housing Administration. Often, FHA loans are more lenient when it comes to debt ratios and borrowers can put as little as 3.5% down. FHA loans also require a lower credit score than conventional loans. While FHA loan requirements are more flexible, borrowers are required to obtain up-front mortgage insurance and maintain it for the life of the loan.
Top four reasons to get an FHA loan
FHA loans are perfect for a borrower who doesn't perfectly fit into the conventional loan criteria. Here are the top four reasons why:
Smaller Down Payment
You can apply for an FHA loan with as little as 3.5% down and the money for your down payment does not have to be your own.
Flexible Credit Guidelines
Since FHA underwriting guidelines are more flexible, you can be approved for an FHA loan with a lower credit score.
Ability to Transfer
FHA loans are assumable, which means a qualified buyer may apply to assume your loan.
Low Interest Rates
FHA loans tend to have lower interest rates than conventional loans for those with a lower credit score.
FHA Loan Qualification Requirements
In order to qualify for an FHA loan, you will need:
FHA rates are generally lower than conventional loans for credit scores under 680. The lowest credit score FHA will permit with the minimum down payment of 3.5% is a 580.
A Down Payment
An FHA loan requires a minimum down payment of 3.5%. FHA loans allow your down payment to be a gift from a family member or down payment assistance funds.
In order to qualify for an FHA Loan you must prove your income. You will need to provide your Mortgage Consultant with pay stubs, W-2s, and, in certain situations, tax returns
Other Qualification Requirements
FHA loans can only be obtained on your primary residence. Since an FHA loan is a government insured loan, you also may not have any delinquent federal debt, such as unpaid taxes or student loans.
A Customized Loan
for Your Life Path
At Precision Home Loans, we believe in personalized banking. We use state of the art technology to make sure that you are advised, included, and supported through every step of the loan process. Most importantly, we take the time to know you and craft products that are tailored to you and your individual life path. Watch the video below to learn more about our unique approach to the loan process.