What is an FHA mortgage?
The Federal Housing Administration (FHA) is a division of HUD. FHA mortgages are insurance backed loans made by approved FHA lenders such as Homestead Funding Corp. We have provided millions of dollars of FHA backed loans to thousands of clients over our twenty year history.
How an FHA mortgage work?
FHA does not lend the money; it simply insures that the total mortgage will be paid if the buyer defaults.
FHA mortgages tend to be more forgiving than conventional mortgages in terms of past credit history. A bankruptcy discharge as little as two years ago may not hinder a homebuyer from qualifying for the FHA program.
FHA loans require as little as a 3.5% down payment. Unlike traditional loans, this money may be a gift to the homebuyer from an FHA allowable source. Additionally, FHA allows for the use of seller concessions to assist in paying borrowers closing costs & prepaid expenses. FHA loans do require upfront mortgage insurance (MIP) which may be financed into the loan as well as monthly premiums. FHA loan limits are dictated by geographic location. Closing costs for an FHA mortgage vary based on location. Consult your Loan Originator for details about your area.
Purchase and Refinance transactions are eligible for FHA loan programs.
Highlights of the FHA home loan program:
- Allow borrowers to purchase or refinance 1-4 unit owner occupied townhouses, condos and PUDS
- Minimal down payment of only 3.5% required
- Liberal qualifying ratios
- Gift funds may be used for down payment, closing costs and prepaid expenses
- Loan limits depend on geographic location
- No first-time homebuyer restrictions
- Co-signers are allowed to help buyers qualify for single family residences
- FHA mortgages are assumable
- Seller concessions allowed
You will benefit from the FHA loan program if you
- have little down payment
- need lenient credit score requirements
- require less restrictive gift guidelines
- are looking for more forgiving requirements in terms of past credit history
To see if you quality for a FHA mortgage, find a Homestead Funding mortgage specialist near you!