FHA Loans

FHA insured mortgages are some of the best kinds of mortgages available. This is because they can help more people into the home buying market. Check out the list below to understand some of the most basic benefits of an FHA mortgage.

Easier to Qualify for – Because they’re backed by the federal government, lenders are more likely to approve riskier loan applications.

Low Down Payments – In most cases, FHA insured mortgages only require a 3.5% down payment, which makes it easier for people to purchase homes. Additionally, the 3.5% can come in the form of a gift to the borrower. Under certain circumstances, FHA loans allow zero down payment options.

Lower Credit Borrowers Qualify – FHA insured loans offer those with less than perfect credit history a better opportunity to obtain a mortgage. 

Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times. They will work with you to help your home from falling into foreclosure. Always try to work out problems with your lender before the situation becomes dire.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.

What is a FHA mortgage? 

• FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans achieve homeownership. FHA mortgages are government backed mortgages. As so, they provide a wider range of lending criteria compared to other types of mortgages. 

What makes a FHA insured mortgage beneficial?

• Numerous factors, mainly because FHA insured mortgages can be easier to qualify for compared to conventional mortgages. They allow lower credit scores and are less strict for borrowers with historical financial hardships.

Do I have to be a first-time buyer to obtain a FHA mortgage?

• No, FHA loans are not restricted to first-time buyers. FHA mortgages can be obtained for both purchase and refinance transactions.

Does a FHA mortgage have to be my primary residence? 

• Yes, FHA mortgages are only eligible for primary residences. FHA mortgages cannot be used for second homes or investment properties. 

Will I have to pay mortgage insurance with a FHA mortgage?

• Yes, FHA mortgages require two forms of mortgage insurance. The first form is an upfront premium of 1.75% of your loan amount. This fee, which is paid directly to FHA, is most often financed within your mortgage but you can choose to pay it within your closing costs. The second form is a monthly fee that is included inside your monthly payment. The amount and terms vary on several factors. Contact us for a detailed explanation. 

What Is An FHA Streamline Refinance?

If you already have an FHA mortgage then you might qualify for a FHA Streamline Refinance. An FHA Streamline Refinance is a great way for a borrower with an existing FHA backed mortgage to reduce their interest rate, reduce their payment or possibly both.

Here are some really cool facts about an FHA Streamline Refinance:

• No Appraisal is Required – because your loan is already guaranteed by your existing FHA loan, the FHA will allow you to use your home’s original purchase price as your home’s current value.
• You can still refinance even if you are underwater – even if you owe more than your home is worth, you might still be able to get an FHA Streamline Refinance loan.
• There is no FHA prepayment penalty to worry about.
• FHA Streamline refinance rates are the same as “regular” FHA loan rates.
• Employment verification is not required with an FHA Streamline Refinance – in other words, no paystubs, no W-2s or tax returns are required for approval.
• Income verification is not required with an FHA Streamline Refinance
• Credit score verification is not required with an FHA Streamline Refinance – instead of checking your credit, your payment history is used to determine fi you qualify or not. You must have no late payments in the last 90 days and only one or less late payment within the last 12 months.

The Refinance Must Have A "Purpose"

Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance or in other words a legitimate reason for refinancing. For Example:

• Refinancing from an Adjustable Rate Mortgage to a Fixed Rate Loan.
• or Reducing your principal + interest + mortgage insurance 5 percent or more.

Your Loan Balance May Not Increase To Cover The New Loan Costs

The FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges. The new loan balance may increase but only by the cost of the Upfront Mortgage Insurance Premium. All other costs -- origination charges, title charges, escrow -- must either be paid by the borrower as cash at closing, or credited by the loan officer in full.

These materials are not from HUD or FHA and were not approved by HUD or a government agency and in some cases a refinance loan might result in higher finance charges over the life of the loan.