What is an FHA Loan

There are lots of reasons to ask your lender for an FHA loan instead of taking a conventional or an expensive and risky sub-prime mortgage loan. Why not take advantage of the many benefits and protections that only come with FHA:

Easier to Qualify:   Because FHA insures your mortgage, lenders are more willing to give loans with lower qualifying requirements so it’s easier for you to qualify.

Less than Perfect Credit:  Even if you have had credit problems, such as bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.

Lower down-payment required:  Compared to a conventional mortgage, FHA only requires a 3.5% down-payment, and that money can come from a family member, an employer, or even a secured loan.  Conventional loans may not allow this.

Costs less:  Many times, FHA loans have lower interest rates because the loans are insured by the Federal Government, and the interest rate is NOT subject to the “loan level pricing adjustments” that conventional mortgages are, which can mean lower closing costs also!  Always compare an FHA loan with other loan types.

Better re-finance options:  FHA has a “streamline” re-finance option.  If the situation arises that it would make sense for you to re-finance, FHA will allow the re-finance without having a new appraisal, updated income documents, or even current depository statements as long as the re-finance amount doesn’t exceed the original amount plus the new mortgage insurance premium!  There are exceptions to the finance amount if there is a new appraisal done.