Let FHA Loans Help You
FHA loans have been helping people become homeowners since 1934. The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal. Why? Because FHA loans have:
- Low down payments
- Low closing costs
- Easy credit qualifying
What Is a Federal Housing Administration Loan (FHA Loan)?
An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payments and credit scores than many conventional loans.
As of 2020, you can borrow up to 96.5% of the value of a home with an FHA loan (meaning you’ll need to make a down payment of only 3.5%). You’ll need a credit score of at least 580 to qualify. If your credit score falls between 500 and 579, you can still get an FHA loan provided you can make a 10% down payment. With FHA loans, your down payment can come from savings, a financial gift from a family member or a grant for down-payment assistance.
All these factors make FHA loans popular with first-time homebuyers.
It’s important to note that the Federal Housing Administration doesn’t actually lend you money for a mortgage. Instead, you get a loan from an FHA-approved lender, like a bank, and the FHA guarantees the loan. Some people refer to it as an FHA insured loan, for that reason.
You pay for that guarantee through mortgage insurance premium payments to the FHA. Your lender bears less risk because the FHA will pay a claim to the lender if you default on the loan.
Tipos de FHA Loans
1- Fixed-Rate FHA Loan
Fixed-rate mortgages are the most common type of FHA loan, as they offer a reliable, consistent payment that homeowners can count on. These typically come in 15- and 30-year terms and have the same interest rate for the entirety of that term. While the government fully backs the loan, lenders set their own interest rates.
2- Adjustable Rate Mortgage (ARM)
Adjustable-rate FHA loans have interest rates that vary over time. They may have a period of 3, 5 or 7 years in which the initial low rate is fixed, but after that period lapses, the rate can rise. This means your mortgage payment would rise as well.
3- FHA Energy Efficient Mortgage (EEM)
FHA Energy Efficient Mortgages, or EEMs, encourage homeowners to make energy-efficient upgrades on their properties. The loans can be used to cover the costs of acceptable energy-related improvements on an existing home or a new home you’re purchasing.
FHA loans are are well known for their affordability – namely their 3.5% percent down payment and relatively lenient credit requirements. The FHA has insured more than 47 million mortgage loans since its inception in 1934. Your down payment can be as low as 3.5% of the purchase price. Available on 1-4 unit properties.
4-FHA 203(k) Loan: Renovation Loan
Have you stumbled across a home that you would like to buy, but needs a little (or a lot) of work? If this is the case, then our FHA 203(k) loan program may be the ideal option for you.
An FHA 203(k) loan enables you to finance not just the price of the home, but also the cost of needed and wanted fixes. With this kind of loan, you don’t have to scramble around to get the house repaired before closing.
When you apply for an FHA 203(k) loan, note that it follows standard FHA guidelines to determine eligibility. Additionally, you have six months to make the changes to the house.
Key Features of FHA 203(k) Loans
- Use one loan to finance the purchase and home renovation
- You have six months to remodel/repair your house
- Standard FHA guidelines are used to determine eligibility
FHA 203(k) improvement loan, which factors in the cost of certain repairs and renovations into the loan. This one loan allows you to borrow money for both home purchase and home improvements, which can make a big difference if you don’t have a lot of cash on hand after making a down payment.
Benefits Offered by FHA 203(k) Loans
You’ll enjoy the following benefits when you get an FHA 203(k) loan:
- Savings – If you depend on your savings to fund and complete the repairs, you might find yourself running out of money quickly. An FHA 203(k) loan lets you hang on to your savings while the house undergoes repair or cosmetic changes.
- Great Deals – Given that an FHA 203(k) loan is great for fixer-uppers, this loan will enable you to purchase a home at a reduced price.
- Low Down Payment – You’ll be able to get a low down payment of 3.5 percent of the total home loan.
The FHA 203(k) loan gives you the opportunity to turn a house that looks a little rough around the edges to your ideal home. If you’re ready to apply for this loan program, contact us today: Contact@MaraidLending.com.
Special Considerations
Your lender will evaluate your qualifications for an FHA loan as it would any mortgage applicant. However, Instead of using your credit report, a lender may look at your work history for the past two years as well as other payment-history records, such as utility and rent payments. You can qualify for an FHA loan if you’ve gone through bankruptcy or foreclosure, provided you’ve re-established good credit. In general, the lower your credit score and down payment, the higher the interest rate you’ll pay on the mortgage.
Keep in mind, when you buy a home, you may be responsible for certain out-of-pocket expenses such as loan origination fees, title fees, real estate fees, inspection fee, and appraisal costs. One of the advantages of an FHA mortgage is that the seller, home builder, or lender can pay some of these closing costs on your behalf. If the seller is having a hard time finding a buyer, they might just offer to help you out at the closing as a deal sweetener.
Along with the credit score and down payment criteria, there are specific lending FHA mortgage requirements outlined by the FHA for these loans. Your lender must be an FHA-approved lender and you must have a steady employment history or have worked for the same employer for the past two years.
If you’re self-employed, you need two years of successful self-employment history, documented by tax returns and a current year-to-date balance sheet and profit and loss statement. If you’ve been self-employed for less than two years but more than one year, you may still be eligible if you have a solid work and income history for the two years preceding self-employment and the self-employment is in the same or a related occupation. You must have a valid Social Security number, reside lawfully in the U.S. and be of legal age in your state to sign a mortgage.
Special Mortgage Considerations
Usually, the property being financed must be your principal residence and must be owner-occupied. This loan program cannot be used for investment or rental properties. Detached and semi-detached houses, townhouses, row houses and condos within FHA-approved condo projects are all eligible for FHA financing.
Your front-end ratio (your mortgage payment, HOA fees, property taxes, mortgage insurance, and homeowner’s insurance) needs to be less than 31% of your gross income. In some cases, you may be approved with a 40% ratio.
If you want to apply or have any questions or doubts about whether you qualify for an FHA loan … Call Us Right Now and one of our FHA Loan Experts will call you.
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