Do You Qualify For FHA Home Loans?
Talk to the Mortgage broker at Elite Mortgage Source.
What Is An FHA Loan?
An FHA loan is a Federal Housing Administration loan which is insured by the FHA and is provided by a lender approved by the FHA. They are specifically targeted towards individuals with low to moderate income. The down payment and the required credit score are also lower than most conventional loans.
You could even avail up to 96.5% of the house’s value and just need to submit a down payment of 3.5%. The required credit score for this is 580. If you have a credit score between 500 and 579, you can still qualify for an FHA loan but the down payment would need to be 10%.
FHA is popular for people purchasing a house for the first time because of its many benefits.
With FHA loans, it is important to understand that you won’t be getting a loan directly from FHA or the US government but an FHA-approved lender such as a bank or some other institution. The FHA guarantees the loan and this is why it is sometimes called an FHA-insured loan. The bank or lending institution would evaluate your qualifications and eligibility for a loan.
You would also need to buy mortgage insurance and make premium payments to FHA. There is less risk on the lender as the FHA will pay a claim to the lender in question should you default on the loan.
Types of FHA Loans
The FHA offers the following loan programs for you to benefit from:
- Traditional Mortgage
This is used to finance a primary home.
- Home Equity Conversion Mortgage
This is basically a reverse mortgage program wherein individuals over 62 are able to turn the equity to cash and also retain the title to the property. There is an option to withdraw funds as fixed monthly income, a line of credit, or even a mix of the two options.
- FHA 203(k) Improvement Loan
These loans take into account the cost of repairs and restorations within your house so that your house is more energy efficient and you have lower utility bills. You don’t just finance your home through this loan but also home improvement projects.
- FHA Energy Efficient Mortgage
This is similar to the FHA 203(k) Improvement Loan but this is solely for upgrades within your house that would significantly reduce your utility bill. These upgrades could be the installation of wind or solar energy systems or new insulation so that your home is more energy efficient. This is done so that you have lower monthly expenses and more dispensable income for mortgage payments.
- Section 245(a) Loan
If you expect your income to increase in the future, this is perfect for you. It starts off with lower monthly payments and gradually increases over time, so it’s called the Graduated Program Mortgage. In the Growing Equity Mortgage, the increase in monthly principal payments is scheduled to increase over time so the loan term shortens.
Do You Qualify for FHA Home Loans?
Contact our mortgage broker at Elite Mortgage Source and find out if you qualify for an FHA home loan.
