An FHA Loan is a government sponsored loan program that is insured by the federal Housing Administration. The Federal Housing Agency FHA was created in 1934 with the passing of the National Housing Act. The Act was passed after the banking system failure of the 1930’s that led to a sever decrease in home loans and home ownership. The goal of the Federal Housing Agency was to stabilize the mortgage market and provide a solid mortgage financing system by insuring the loans that were written. Due to the government insuring the loan it allows FHA approved lenders to be more lenient on credit and loan to value guidelines for both FHA Refinance and FHA Purchase Loans.
Benefits of FHA loans include
- Lower Down Payment (3.5%)
- Lower Mortgage Rates
- Credit Score requirements are more lenient
- Underwriting guidelines are more lenient
- No Pre Payment Penalty
- Gift Funds allowed
- Seller Contributions on purchase loans
- Streamline FHA Refinances are fast and easy
- FHA Loans can be Assumed
- Housing Counselor access
Credit Score: The better the score the better FHA rates you can obtain
Loan to Value Ratio: Is an important factor
Loan Size: Will determine FHA Loan eligibility or program
Term of the Loan: When do you want to pay off the loan
Goal of the Loan: Fix Term, Shorten Amortization etc…..
Eligibility: The better the credit and income the easier it will be for a borrower to obtain an FHA Loan
FHA Loan Limits: https://entp.hud.gov/idapp/
FHA Condo Information: https://entp.hud.gov/idapp/