Federal Housing Administration (FHA) Loans

Federal Housing Administration (FHA) loans are “guaranteed” by the government, which means the lender has less risk when giving you the loan. For this reason, you can get an FHA loan with a lower down payment than with a conventional loan. The minimum down payment for an FHA loan is 3.5% of the home’s appraised value.

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Three types of FHA Loans

FHA 203(B)

FHA 203(B) fixed rate mortgage (can be 15-year or 30-year)

FHA 251

FHA 251 Adjustable Rate Mortgage

FHA 2-1

FHA 2-1 Buy-down loans

Benefits of an FHA Loan

Among its benefits, an FHA loan is easier to qualify for as far as lower credit scores, income ratios, and size of down payment. However, rates are established by the lender, not the government, so you will still need to shop around for your FHA loan to get the best deal. FHA loans are also “assumable,” if the buyer meets credit criteria, which may make your home easier to sell if you need or want to sell it in the future.

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FHA Loan Information

Rather than Private Mortgage Insurance (PMI) as with a conventional loan, you will have a mortgage insurance premium. You will pay a 1.75% UFMIP (Up Front Mortgage Insurance Premium) which is a percentage of the loan amount at closing and 0.55 monthly mortgage insurance. When putting down 5% or more down, it is reduced to .50%.

You can get your down payment from a variety of sources, such as: personal funds or savings, loans or gifts from family members. Down payments cannot come directly or indirectly from anyone who benefits from the sale – i.e. the seller.

FHA loan limits are $472,030.

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