FHA Home Loans
An FHA loan allows borrowers to buy a home or refinance with less strict financial requirements. If you have a lower credit score, higher debt, or even a past bankruptcy, you may still be able to qualify for an FHA mortgage.
FHA loans are government-backed by the Federal Housing Administration, an agency under the Department of Housing and Urban Development. These loans are insured by the FHA, so if the borrower defaults on the loan, the organization will protect the lender against loss.
FHA loans not only have lower credit score requirements, but they also come with low down payment options, which makes this an attractive loan option for first-time buyers. However, you don’t have to be a first-time buyer to qualify.
Why Consider an FHA Loan?
FHA loans are by far the easiest mortgages to qualify for due to the program’s flexible credit guidelines and low down payment requirements. A borrower who cannot afford a traditional down payment of 20% or has experienced a financial hardship like a short sale, foreclosure, or bankruptcy may be able to benefit the most from the FHA program.
Benefits of an FHA Loan
3.5% down payment
Credit scores down to 580 (and sometimes lower in some cases)
No prepayment penalty ever
FHA loan may be assumable
Up to 57% debt to income (DTI) ratio (subject to change without notice)
Allows for 6% seller-paid closing costs
Easily use financial gifts for down payment and closing costs
Allows for non-occupying co-borrowers to help qualify
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Most popular FHA program for home purchase
Fixed and ARM rates available
1-4 unit properties eligible
3.5% down payment
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Most popular HUD foreclosure program
No appraisal needed
Allows for repairs up to $5K
$100 down payment
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Most popular FHA refinance program
No appraisal required
No income verification
Reduced documentation
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Debt consolidation OK
Cash out up to 85% LTV
Debt to income ratio up to 50%
Fixed and ARM rates available