FHA Loans
Minimum down payments of 3.5% and minimum Fico of 580.
Buying your first home? An FHA Loan might be just what you need. Your down payment can be as low as 3.5% of the purchase price with a minimum Fico score of 580. Available on 1–4-unit properties.
What is an FHA Loan
An FHA Loan is a government loan insured by FHA. FHA insures mortgages so that lenders will be encouraged to make more mortgages available for people. The Federal Housing Administration (FHA) is part of the U.S. Department of Housing and Urban Development (HUD). FHA provides mortgage insurance on loans made by FHA-approved lenders, and insures mortgages on single-family homes and multifamily properties throughout the United States and its territories.
FHA mortgage insurance protects lenders against losses. If a property owner defaults on their mortgage, they will pay a claim to the lender for the unpaid principal balance. Because lenders take on less risk with an FHA Loan, lenders can offer more mortgages to homebuyers.
Mortgage Insurance Premium (MIP)
If you are an FHA-insured borrower, the Mortgage Insurance Premium (MIP) you pay as a part of your monthly mortgage payment is what makes the reduced downpayment on your mortgage possible. FHA uses these payments to insure your lender against losses if the loan goes to foreclosure.
Many homebuyers ask if they can stop paying FHA monthly mortgage insurance premiums with their mortgages. The FHA mortgage insurance agreement is between FHA and the mortgage company, so after closing you can contact your mortgage company and ask them what they require to drop the insurance. Most mortgage companies will want you to have a substantial amount of equity in your home.
Up Front Mortgage Insurance Premium (UPMIP)
An additional requirement for an FHA Loan is the UPMIP, or the “up front mortgage insurance premium”. UPMIP is required for most of the FHA’s Single Family mortgage insurance programs. This does not have to be paid out of pocket, but can be rolled into your loan.
Disclaimer: Mortgage options are funded by 3rd party Lenders, and all underwriting requirements are based on 3rd party Lenders and Investors. Guidelines and mortgage options requirements and are subject to change. This is not a promise or commitment for a mortgage loan. Mortgage loan options may not be available in all States. For full licensing information, go to: www.nmlsconsumeraccess.org.
