FHA Home Loans
Making homeownership more accessible
An FHA Home Loan is a mortgage program insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD). These loans are offered through participating lenders and are designed to help individuals, especially first-time homebuyers, qualify for homeownership.
What Are the Benefits of an FHA Home Loan?
- Low Down Payment: You can qualify with as little as 3.5% down.
- Seller Contributions: The seller can contribute up to 6% of the sale price towards your closing costs.
- Co-Signers: A parent or relative can co-sign the loan as a non-occupant, which can increase your chances of approval.
- Mortgage Insurance: FHA loans require mortgage insurance to protect lenders in case of defaults. The upfront premium can be rolled into the loan, and you'll be responsible for annual premiums.
Who Is Eligible for an FHA Home Loan?
Eligibility is based on the following criteria:
- Down Payment: You must have at least 3.5% of the purchase price.
- Debt-to-Income Ratio: Your mortgage payment must not exceed 45% of your monthly income.
- Employment History: You need two years of consistent employment and verifiable income.
- Credit: Less-than-perfect credit doesn't automatically disqualify you, but the underwriter will review your credit history.
Eligible Properties for FHA Loans
FHA loans can be used for the following types of properties:
- 1-4 Unit Primary Residences
- Condominiums (approved by FHA)
Manufactured Housing (must have a permanent foundation and be considered a permanent)
Advantages of FHA Home Loans for First-Time Buyers
For first-time buyers, FHA loans offer significant advantages, such as:
- Lower Down Payments: As little as 3.5%, reducing the upfront cost.
- Co-Signer Option: A relative or parent can co-sign, which may improve your chances of approval.
- Easier Qualification: FHA loans may be easier to qualify for, even with less-than-perfect credit.