The FHA Loan Program was established by the U.S. government in 1934 to help more Americans accomplish the American Dream of becoming home owners. The Federal Housing Administration (FHA) insures these loans, which makes it less risky for lenders to offer loans to individuals who may have a short credit history or have hit some bumps in the road.
FHA loans are particularly popular with first-time home buyers because they are among the easiest mortgages to qualify for, and require a smaller down-payment than many other loans.
- Easier credit qualification – while minimum credit scores vary based on the exact loan requirements, borrowers typically need a credit score of 580 or higher to get the best rates.
- Low down payments – as low as 3.5%, and the money can be a gift or a grant
- Low closing costs
While the low-down payment and low closing costs are attractive, qualifying buyers should still consider their options. The down-side of an FHA mortgage is that the buyer must pay both an upfront mortgage insurance premium (commonly rolled into the loan) as well as a monthly mortgage insurance payment. A no PMI loan might be a better option for some buyers.
Contact us for more information, personal quote or a personalized pre-qualification letter to go along with your purchase offer.