FHA is one of the best loan programs for buyers today. FHA stands for Federal Housing Administration. FHA is part of HUD Housing and Urban Development. The FHA loan was developed for home owners to secure affordable loans to purchase home. For many years FHA has been the back bone for home owners in America.
Benefits to the FHA loan
Currently FHA only requires a minimum down payment** of 3.5% which is a very low down payment requirement. The Down Payment can come from family members, close friends, employers, churches and other non profit sources. FHA is flexible for credit challenged buyers. FHA buyers are not required to have high credit scores. It is true credit scores are becoming more important, FHA still offers financing for buyers with 640 credit scores. Low Fixed Rates. FHA loans are among the lowest rates for 30 year fixed mortgages today. FHA also offers ARM loans and 2-1 buy downs. Very Affordable Mortgage Insurance. Compared to other loans that require Mortgage insurance FHA’s mortgage insurance is more affordable. Flexible Underwriting. The FHA loan was designed to be a loan that would help people become Homeowners. The underwriting can be more flexible and is more forgiving than other types of loans. FHA underwriters are able to look past just a credit score to understand past situations. FHA allows sellers to pay 6% in closing cost for buyers. Buyers who have limited savings can take advantage of this to lower the expense of buying a home.
**FHA is one of the only loan programs that still allow for manufactured home financing with a credit scores as low as 620. See the Manufactured Home Loan Page for more information.
FHA is a great loan for First Time Home Buyers who do not have a large down payment. Many First Time Home Buyers take advantage of the minimum down payments of 3.5% and lower minimum credit scores. FHA also offers other benefits that are not as well known. Since FHA is part of HUD ( United States Housing and Urban Development), if borrowers do run into problems, FHA requires lender to offer many work outs so the number of foreclosures are limited. This is a great benefit to the FHA loan over conventional loans.
FHA also provides wonderful financing for HUD REPOS , HUD Owned Propertied and the Good Neighbor Next Door Program. Please see the FHA Special Programs Page.
If you had a foreclosure in your past FHA will require 3 years form the foreclosure date before proving you a home loan. If you had a foreclosures on a FHA home loan you will need to wait 3 years from when the date FHA paid the initial claim to the lender who foreclosed.
Let’s see if a FHA loan is the Best Loan for You.