Mortgage Terms 101: FHA Financing
Believe it or not, an FHA loan is often one of the easier types of mortgage loans to qualify for concerning credit and down payment. Why? Buyers can qualify for an FHA loan with a down payment as little as 3.5% with a credit score of 580 or higher. If your credit score is between 500 – 579, you’re looking at more like a 10% down payment. With that said, FHA loans are great options for first-time homebuyers or those that are recovering from credit challenges. FHA loans are backed (insured) by the Federal Housing Authority (FHA).
Hamilton Group Funding offers a variety of FHA loans:
An FHA Purchase loan requires as low as 3.5% down payment based on the purchase price or the appraised value of the home (whichever is lower). Non-occupying co-borrowers (such as parents) are allowed. Down payments and closing costs may also be gifted by a family member or obtained through a down payment assistance program. As with most other types of mortgages with less than 20% down, you will be required to have mortgage insurance. The flexibility of this program makes it a great fit for first-time and college-age homebuyers who may not have saved enough for a 20% down payment yet, or who plan to have a family member help them purchase their first home.
FHA Streamline Refinance
If you have an existing FHA mortgage on a home you live in, you may choose to refinance using this product to take advantage of the current low interest rates. The FHA Streamline Refinance offers a simplified loan process. An appraisal may or may not be needed … one of the factors is whether or not you want to roll the closing costs into the refinance. In order to qualify, you must meet certain requirements, so contact your mortgage loan officer to see if this is the right fit for you.
FHA 203(k) – Full & Streamline
An FHA 203(k) is ideal for those wishing to purchase a fixer-upper home. In addition to the cost of the property, the loan will include the cost of repairs and/or remodeling projects. The total amount you can borrow is based on the Loan-to-Value (LTV) ratio of the property. Qualifying projects include structural repairs, landscaping, plumbing, siding, decks, kitchen and bathroom updates, and more.
With the streamlined version of this loan, in addition to the purchase price of the property, you can finance up to $35,000 worth of uncomplicated repairs and improvements that might include purchasing new floors, remodeling the kitchen, or seamless gutters to help with all that summer rain.
FHA loan guidelines vary and can change frequently. If you’d like to speak with one of our mortgage consultants about whether or not an FHA loan is a good fit for you, please don’t hesitate to contact us!