FHA Home Loan
An FHA loan offers a government-insured solution with flexible terms, making homeownership more attainable. Even seasoned homeowners often need to plan meticulously for a new home purchase, but FHA loans can assist some buyers in realizing their homeownership dreams with a reduced down payment.
What is an FHA loan?
FHA loans are mortgage options backed by the U.S. Federal Housing Administration. These loans, provided by institutions like banks and credit unions, facilitate home purchases with a lower initial down payment requirement. Buyers may move into their new home with as little as 3.5% down.
What's needed for an FHA loan?
Many of the same documentation requirements apply to FHA loans, just as any lender would expect: employment history, appraisal, and debt-to-income ratio. Additional FHA-specific conditions also apply. Buyers might need to provide a 3.5% down payment, more if their credit score falls below 580. FHA loans are exclusively for the borrower's primary residence.
Credit criteria for FHA loans may be more lenient if other factors demonstrate responsible financial management. Lenders evaluate each application individually and may request extra documentation or explanations. They often accommodate buyers with lower credit scores or shorter credit histories than other loan situations.
How FHA Loans Operate
- Purchase your home with as little as a 3.5% down payment (as opposed to the 20% usually required on most loans).
- Fixed-rate terms of 30-, 25-, 20-, and 15 years are available.
- A 5-year adjustable rate mortgage is an option.
- No pre-payment penalties allow you to pay off your mortgage anytime.
Minimum FICO Score
- 500 with debt-to-income limits
- 580 high balance with limits
Down Payment
- 3.5% minimum borrower
- Down Payment Assistance Programs are available for those who qualify
Occupancy
Primary residence
Other Highlights
- UPMIP financed
- Monthly mortgage insurance required
- 100% gift funds allowed
- Up to 6% seller contribution
Embark on your journey toward mortgage approval right here.
At Rate Simple, securing your dream home begins with the first step of the mortgage approval process. By initiating your application with us, you're taking the essential stride toward turning your homeownership aspirations into reality.