An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). FHA is the world’s largest insurer of residential mortgages, insuring tens of millions of properties since 1934. Because FHA insures their own loans, lenders are able to offer financing options that otherwise would not be available.
FHA loans are a good option for first-time homebuyers because its one of the easiest mortgages to qualify for because they require a low downpayment, and you can have less-than-perfect credit.
If you cannot afford a higher downpayment, have a low credit score, or cannot be approved on a conventional loan due to past credit, you should look into whether an FHA loan is the best option for you.
There are many reason why an FHA loan may be right for you; it depends largely on your unique situation. Here are some key points that could assist with your decision.
- Sellers are allowed to pay up to 6% of your closing costs.
- Higher debt-to-income ratios allowed.
- Downpayment can be a gift from a family member.
- Mortgage insurance is required for the life of the loan.
- Non-occupying co-borrowers are allowed.
- Student loan payments are factored into debt-to-income ratios, unlike conventional loans.
- The interest rate offered is typically lower than those offered on conventional mortgages.
FHA loans offer a wealth of benefits for many home buyers. If you are considering using an FHA loan to buy a home, start by clicking below to get pre-approved today.