FHA home loans are designed to help those with low to moderate incomes purchase homes. Because these mortgages are backed by the Federal Housing Administration, they allow homebuyers who typically wouldn’t be approved for a conventional loan to receive the financing they need.
With flexible options and requirements, FHA loans are attractive to many homebuyers — especially first-time buyers. Our team at HUNT Mortgage will help you understand what an FHA loan entails and if it is the right choice for you.
Benefits of FHA home loans include:
LOWER DOWN PAYMENT
While some conventional loans require you to pay at least 20% down unless you have a high income and credit score, with an FHA loan you can put as little as 3.5% down, allowing you to keep more money in your savings for other expenses.
FHA loans require lower credit scores than traditional loans, making it easier for homebuyers to get approved for the financing they need.
LOWER INTEREST RATES
Buyers with lower credit scores usually face higher interest rates with conventional loans. But with an FHA loan, you’ll likely qualify for interest rates that are much lower than those that you would qualify for otherwise.
DECREASED CLOSING COSTS
With an FHA loan, you can put less money down while requesting a home seller pay more toward your closing costs than is allowed with traditional loans.
FHA LOANS ARE ASSUMABLE
If you haven’t paid off your FHA loan by the time that you sell your home, the next buyer can assume your loan rather than purchasing a new mortgage at the current interest rate. Often, this allows the new buyer to take advantage of a lower rate, potentially resulting in a quicker sell.
Downside of an FHA: Mortgage insurance costs.
Mortgage insurance premiums (MIPs) for FHA loans consist of both an upfront premium and a monthly premium, which often makes them more costly than private mortgage insurance premiums would be on a conventional loan. In addition, FHA loans require you to pay insurance for the entire life of your loan, whereas with a traditional loan you’d likely be able to drop private mortgage insurance once you paid 20% of your home’s value, or you can avoid it all together if you put at least 20% down.
Is an FHA loan right for you?
Our Mortgage Consultants are here to help you find out. Contact us today or request a quote to get started on your loan hunt. We’re committed to setting you up for success so you can get approved on a mortgage that’s right for you.
**HUNT Mortgage is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.