An FHA loan provides a government-insured loan with flexible loan options. Even experienced homeowners may need to plan for a long time for a new home purchase. Fortunately, FHA loans may help some buyers get into the home of their dreams with a lower down payment.
What Is an FHA Loan?
FHA loans are mortgages backed by the U.S. Federal Housing Administration. Lenders, such as banks and credit unions, that provide FHA loans provide funding for home purchases while requiring a lower down payment. Buyers may get into a new home with as little as 3.5% down.
What Is Required For an FHA Loan?
Many of the same documents are required for an FHA loan that would be required for any other mortgage they include; employment history, home appraisal, debt-to-income ratio analysis, credit check and specific loan disclosures. Buyers should expect to bring 3.5% of the purchase price as a down payment, more if they have a credit score below 580. FHA loans are only available for the borrower’s primary residence.
Credit requirements may be lower for FHA loans, given other factors that demonstrate the borrower is able to manage their money responsibly. Lenders complete a review of each individual application. They may ask for additional documentation or explanations if needed.
How FHA Loans Work
- Purchase your home with as little as 3.5% down payment (compared to 20% required on some loans).
- 30-, 25-, 20- and 15-year terms are all available with fixed rates.
- Pay your mortgage off at any time without pre-payment penalties.
Have questions? Give us a call! One of our mortgage experts would be happy to answer all of your questions.
**Lendmire is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.