Understanding FHA Loans
For today's home buyers, there are only a few mortgage options which allow for down-payments of five percent or less. When purchasing a home at the Lake of the Ozarks, an FHA mortgage is an attractive option for anyone who qualifies. The opportunity to come up with a lower down payment and the reduced/limited closing costs is a great benefit to any home buyer. Let's take a look at what an FHA mortgage is and some of the benefits of FHA financing for qualified buyers.
WHAT IS AN FHA LOAN?
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.
BENEFITS OF FHA FINANCING
FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
Some of the other benefits of FHA financing:
One of the biggest enticements of getting an FHA loan is that having poor credit doesn't necessarily mean that you'll be disqualified. As with any lending option, there are still stipulations. People with credit scores under 500 generally are ineligible for FHA loans. However, the FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Those with credit scores between 500 and 579 must make down payments of at least 10 percent. And borrowers with a credit score of 580 or higher may be eligible for a loan with a down payment as low as 3.5%! Since there is more wiggle room for approval with lower credit scores, this makes obtaining a mortgage loan somewhat more attainable for more buyers.
YOUR TRUSTED MORTGAGE LENDER AT THE LAKE OF THE OZARKS
WHAT IS AN FHA LOAN?
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.
BENEFITS OF FHA FINANCING
FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
Some of the other benefits of FHA financing:
- Only a 3 percent down payment is required.
- Closing costs can be financed.
- Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
- More flexible underwriting criteria than conventional loans
- FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
- Loans are assumable to qualified buyers.
LESS THAN PERFECT CREDIT IS OKAY!
One of the biggest enticements of getting an FHA loan is that having poor credit doesn't necessarily mean that you'll be disqualified. As with any lending option, there are still stipulations. People with credit scores under 500 generally are ineligible for FHA loans. However, the FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Those with credit scores between 500 and 579 must make down payments of at least 10 percent. And borrowers with a credit score of 580 or higher may be eligible for a loan with a down payment as low as 3.5%! Since there is more wiggle room for approval with lower credit scores, this makes obtaining a mortgage loan somewhat more attainable for more buyers.YOUR TRUSTED MORTGAGE LENDER AT THE LAKE OF THE OZARKS
At MHQ - Mortgage HeadQuarters, we find FHA Loans to be a great source of funding for our clients. We can share our knowledge and experience with FHA loans, making it easier to compare to conventional financing. So, if you're in need of a mortgage for a new home or have any questions pertaining to FHA mortgage lending, trust in the mortgage professionals at MHQ - Mortgage HeadQuarters to have your best interest in mind. We can help you choose a mortgage program that's right for you and your specific needs!
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