FHA Loans and Loan Programs

Many people have the misconception that FHA refers to some big government entity providing loans only to first time homebuyers and credit challenged borrowers.  FHA actually refers to a type of loan issued by a qualified lender and insured by the Federal Housing Administration (FHA).  FHA loans are designed for borrowers who are unable to make a large down payment, and FHA loans allow the FHA Loansborrower to borrow up to 97.5% of the value of the home.

FHA Loans differ from conventional loans in that the  down payment requirement can come from a gift or a grant.  Because the homebuyer does not necessarily have to save up for the down payment, FHA loans have proven to be very popular to first time home buyers though seasoned home buyers may take advantage of the guidelines as well.  The only restriction is that a homebuyer can only have one FHA loan at a time. Credit requirements are more relaxed when qualifying for an FHA loan when compared to that of a conventional loan.

Credit scores in the low 600’s or even below may not immediately disqualify a borrower from obtaining FHA financing.  Scores of that nature may require a significant down payment if a conventional would consider taking the risk.

So a low down payment and more relaxed credit requirements should make an FHA loan a no-brainer, right?  Not so fast.  FHA loans carry a greater perceived risk so unlike conventional loans with say 20% down, two mortgage insurance premiums are now required on all FHA loans.   The first is an upfront premium equal to 1.75 percent of the loan amount — $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan, but it can be financed as part of the loan amount. The second is called the annual premium, but the premium is actually added to your monthly payment. This premium varies based on the length of the loan, the amount borrowed and the initial loan-to-value ratio, or LTV.

Please complete the form below for a quick pre-approval for your home purchase loan.  A loan officer will review your information and contact you regarding the programs you appear to qualify.  If you have already found a property, please note that in the comments section and your inquiry will be expedited.

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