The Federal Housing Administration — part of HUD — insures the loan, so your lender can offer you a better deal.
Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan.
Funds to close can come from personal savings, gifts, grants, loans from retirement accounts, and seller contributions.
FHA does not have specific credit score requirements — a low score is not automatically cause for denial.
FHA might be just what you need. Down payments as low as 3.5%, with most closing costs and fees includable in the loan. Available on 1–4 unit properties.
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or refinance what you owe and add the cost of repairs — all in one.
62 or older, living in your own home, owned outright or with a low balance? The FHA Reverse Mortgage lets you convert a portion of your equity into cash.
Include energy improvements in an FHA Energy-Efficient Mortgage — and yes, FHA has financing for mobile homes and factory-built housing too.
FHA allows a buyer to purchase a home with as little as 3.5% down, and tends to be more lenient on areas such as credit, funds to close, and co-borrowers. If credit scores are low, it is up to the borrower to demonstrate their ability and willingness to pay the loan back — your explanation of past credit difficulties is actually considered in the underwriting process.
The underwriter on an FHA loan reviews your credit and payment history concentrating on the most recent 12 to 24 months. A good recent payment record can often get you approved even when Conventional financing has turned you down. An experienced loan officer can help you clearly tell your story and make your file more acceptable to FHA.
Keep in mind the total cost to close is commonly over the 3.5% minimum — with down payment, closing costs, escrows for taxes and insurance, plus interest to finish the month of closing, total costs can be closer to 6–8% of the sales price. The interest rate you select also has a bearing on total costs: a lower rate may mean paying additional money toward points, while a slightly higher payment may reduce your costs to close.
FHA allows funds to close from several sources: personal savings, gifts, grants, loans from retirement accounts, and seller contributions.
Our team will walk you through FHA qualifying — and every alternative — before you commit to anything.