What are FHA Loans?

HomeBlogWhat are FHA Loans?

If you do not qualify for a USDA loan, VA loan, or a conventional loan, you may qualify for an FHA loan. FHA loans allow you to put less money down on your mortgage while you work on improving your credit score. But the flexibility of an FHA loan also comes with a cost – you may need to pay high annual costs in the form of mortgage insurance premiums.

What are FHA Loans?

FHA loans are a type of mortgage  backed by the government. They are also insured by the Federal Housing Administration. Many first-time homebuyers take advantage of FHA loans because they require lower minimum credit scores and down payments than conventional loan types.

Most FHA loans feature 15- or 30-year terms along with fixed interest rates. The goal of the flexible underwriting standards of these loans is to give those who might not normally qualify for a conventional mortgage the chance to still purchase a home.

If you finance 90 percent or less of your home’s value, you will no longer need to pay the FHA mortgage insurance premiums on your loan after 11 years have gone by. If you get an FHA loan, you will also not be required to pay more than 3 to 5 percent of the loan amount in closing costs.

An FHA loan may be a good option for you, depending on your current financial situation. We would be happy to answer any questions you have about this type of loan, so contact us today.

 

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