An FHA (Federal Housing Administration) loan is a loan insured against default by the FHA. In other words, the FHA guarantees that a lender won’t have to write off a loan if the borrower defaults – the FHA will pay.
FHA loans are not for everybody. Nevertheless, they are a great help to some borrowers.
FHA loans allow people to buy a home with a down payment as small as 3.5%. Other loans might not allow such a low down payment.
Who can get an FHA Loan?
Almost anybody can get an FHA loan. There are no income limits. However, there are limits on how much you can borrow. In general, you're limited to median home prices in your area. To find the limits in your region, visit HUD's Website. To qualify for an FHA loan, you'll need to have reasonable debt to income ratios. You don't need perfect credit but you will need to have a credit score of at least 620.
FHA loans offer a few other bells and whistles:
3.5% down payment required on purchase
Easier to use gifts for down payment and closing costs
No prepayment penalty
Financing for home improvement using FHA 203k programs
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This was our second refinance with Troy. The second I used my VA loan benefit. Communication was fluid between Troy and I. Especially when documents were needed. We simply scanned them in and shot them over via email. the only time that we had to go to the office was for closing. By far one of the easiest and least stressful refinances and closings that my wife have ever experienced! As Troy received updates, he would immediately pass them along to us. Any questions that we had, Troy would clearly explain and answer all of our questions and address any concerns that we may have had. Substantially easier than dealing with one of our previous mortgage lenders.
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