FHA loans are home loans that are guaranteed by the US Federal Housing Administration. These loans will always carry mortgage insurance, which is in place to protect the lender in the case the borrower were to default on the loan. Unlike conventional loans, FHA loans will always carry monthly mortgage insurance – no matter how much of the home you have paid off. In addition, an FHA loan will always originate from a pre-approved lender by the Federal Housing Administration, which will ultimately protect the borrower as well.
Who should apply for an FHA Loan?
FHA loans are in place to help families with lower income purchase homes. They lend a great opportunity to those families who are in tighter financial situations or those that are looking to put less money down on a home. Because of their flexibility, there are additional requirements that need to be met in order to become eligible for an FHA loan.
What are some of the requirements?
In addition to the mandatory monthly mortgage insurance premium. The borrower must also pay an additional premium up-front to the Federal Housing Administration. This premium is usually added to the overall loan amount and will rolled into the mortgage payment as well. There are also many other factors that play into becoming eligible for FHA loans, ranging from loan limits, debt-to-income ratios to the type of housing being purchased. Because of this, it should be noted that while an they may be the best option for some borrowers, it may not always be in your best interest to go this route, after taking into consideration all factors and requirements.
Nonetheless, First Bank is here to guide you through the process and answer any questions you may have to ensure you’re using the best mortgage program available to you.