FHA Loan

An FHA is a mortgage loan insured by the Federal Housing Authority. While it is like any other loan, when underwritten to meet official FHA loan guidelines, it can be insured with the full backing of the US Government. As a result, the lender is able to provide interest rates that are often lower than conventional loans, whose bonds are not fully backed. FHA guidelines provide for less stringent underwriting as well. In the case that a borrower defaults and the lender has to take the property back FHA Insurance will make the lender whole.

Low Down Payment

3.5% of purchase price.

Mortgage Insurance

Up-Front and Annual paid monthly.

Flexible Guidelines

This loan is insured by FHA.

Types of Loans

Purchase, Refinance, Cash Out

Lower Rates

Often less than Conventional 30-Year Fixed

Credit Requirements

Most banks require at least a 580 Fico Score.

Benefits of using an FHA Loan: FHA has many positive points, but the most obvious are the ability for a borrower to purchase a home for 3.5% down payment, qualify through relaxed guidelines, and obtain interest rates that are often lower than conventional 30-Year Fixed Mortgages.

Why Are FHA’s Rates Lower? FHA Insured Loans are tied to Ginnie Mae Bonds which are the only mortgage bonds that have the full backing of the federal government. These bonds are considered risk-less and therefore are priced accordingly. This allows lenders to provide lower rates on FHA Loans.