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FHA

First time homebuyer, I need a low down payment.

Why a FHA Loan?

Lower Down Payment

FHA loans typically require a lower down payment compared to conventional loans, as low as 3.5% with a qualifying credit score. Making them more accessible to first-time homebuyers or those with limited funds for a down payment.

Low Cost Mortgage Insurance

Mortgage Insurance protects the lender in case the borrower defaults on the loan. While this adds an extra cost to the loan, it can also make it easier for borrowers to qualify for a loan since lenders are more willing to lend when there is insurance protection in place.

Flexible Debt-to-Income Ratios

FHA loans allow for a higher debt-to-income ratio compared to conventional loans, which can make it easier for borrowers to qualify for a loan.

Flexible Credit Score Requirments

FHA loans also have more lenient credit score requirements compared to conventional loans. Borrowers with a credit score of at least 580 can qualify for an FHA loan, down payment will vary depending on lender.

I'm interested in a FHA loan.

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FAQs

Common questions regarding FHA loans.

An FHA loan is a mortgage loan insured by the Federal Housing Administration (FHA). FHA loans are designed to help individuals who may have difficulty qualifying for a conventional mortgage, by offering lower down payments and more lenient credit score requirements.

The maximum loan limit for FHA loans varies by location and is based on the median home price in that area. In 2021, the maximum loan limit for a single-family home in most areas is $356,362, but in higher-cost areas, it can go up to $822,375.

FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount, as well as an annual MIP that is added to the monthly mortgage payment. The amount of the annual MIP varies depending on the loan-to-value ratio and the length of the loan term.

There is no specific income requirement to qualify for an FHA loan, but borrowers must have a steady source of income and be able to afford the monthly mortgage payment. Lenders will typically look at the borrower's debt-to-income ratio (DTI) to determine whether they can afford the mortgage.

The DTI is calculated by dividing the borrower's monthly debt payments by their gross monthly income. The maximum DTI for an FHA loan is typically 43%, although lenders may allow higher DTIs under certain circumstances.