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FHA Home Loans

FHA Loans are a type of government loan, backed by the Federal Housing Administration. These loans were designed to provide homeownership opportunities for borrowers with requirements that are less strict that a traditional conventional mortgage, and can be obtained for as little as 3.5% down. Because these loans are backed by the government, FHA loans often have rates competitive with conventional loans. 

This loan could be a great option for borrowers that:

  • have credit issues
  • need a low down payment option
  • have had a bankruptcy or other financial issues in the past
  • need to roll closing costs into their loan

These loans don’t conform to the limits for Fannie or Freddie, rather the limit for areas in the US is 115% of the median home price for the county (which is set by the US Dept. of Housing and Urban Development). For the lowest down payment - 3.5% - the minimum credit score required is 580 but borrowers with credit scores between 500-579 can get an FHA loan for 10% down.​

Similar to conventional loans, FHA loans require monthly mortgage insurance, however, the mortgage insurance for these loans is generally paid for through the life of the loan. In addition to mortgage insurance, these loans also require an upfront mortgage premium of 1.75% at closing and an annual Mortgage Insurance Premium (MIP) of 0.45-1.05%. Keep in mind that, as with other loans, a borrower can refinance out of a FHA loan once their financial situation improves.

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