FHA Home Loans

FHA Home Loans

An FHA loan allows borrowers to buy a home or refinance with less strict financial requirements. If you have a lower credit score, debt, or even a past bankruptcy, you may still be able to qualify for an FHA mortgage.

FHA loans are government-backed by the Federal Housing Administration, an agency under the Department of Housing and Urban Development. FHA loans are insured by the FHA, so if the borrower defaults on the loan, the organization will protect the lender against loss.

FHA loans not only have lower credit score requirements, but they also come with low down payment options, which makes this an attractive loan option for first-time buyers. However, you don’t have to be a first-time buyer to qualify.

Why Consider an FHA Loan?

FHA loans are by far the easiest mortgages to qualify for due to the program’s flexible credit guidelines and low down payment requirements. A borrower who cannot afford a traditional down payment of 20% or has experienced a financial hardship like a short sale, foreclosure, or bankruptcy may be able to benefit the most from the FHA program.

What Are the Benefits of FHA Loans?

  • 3.5% down payment
  • Credit scores down to 580 (and even lower in some cases)
  • No prepayment penalty ever
  • An FHA loan may also be assumable
  • Up to 57% debt to income ratio, subject to change without notice
  • Allows for 6% seller paid closing costs
  • Easy to use gifts for down payment and closing costs
  • Allows for non-occupying co-borrowers to help qualify

What Are the Waiting Periods After a Hardship?

  • 3 Years from Foreclosure or Short Sale
  • 2 Years from Discharge of Chapter 7 Bankruptcy
  • 1 Year from Discharge of Chapter 13 Bankruptcy

What Are Some Popular FHA Programs?

Standard FHA Purchase
  • Most popular FHA program for home purchase
  • Fixed and ARM rates available
  • 1-4 unit properties eligible
  • 3.5% down payment
HUD REO $100 Down Program
  • Most popular HUD foreclosure program
  • No appraisal needed
  • Allows for repairs up to $5K
  • $100 down payment
FHA Streamline Refinance
  • Most popular FHA refinance program
  • No appraisal required
  • No income verification
  • Reduced documentation
FHA Cash Out Refinance
  • Debt consolidation OK
  • Cashout up to 85% LTV
  • Debt to income ratio to 50%
  • Fixed and ARM rates available