FHA Loans

What is an FHA Loan?

FHA mortgages are similar to fixed rate mortgages. However, they are insured by the federal government. The consumer pays the mortgage insurance premiums. The initial premium is determined by the length of the loan and the amount of the down payment.

With an FHA loan, you can buy a house with as little as 3% down. This is great for first-time home buyers. You can also take advantage of this if you have a shortage of funds for the down payment. Your loan is insured. This means that if you default, the lender is paid from the insurance fund.

How to Qualify for an FHA Loan?

To be eligible for an FHA loan, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) cannot exceed 29% of your gross monthly income.

You must:
» have a good credit background
» have enough income to pay your monthly debt
» be able to pay the closing costs (usually 2-3% of the total home price)
» have enough cash to make a down payment at closing time

Apply for an FHA loan