FHA Loans
FHA loans provide flexible options for homebuyers. The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), backs these loans, making them popular among first-time buyers. FHA loans require lower credit scores and down payments compared to conventional loans, which can help buyers who may not meet stricter requirements.
To qualify for an FHA loan, a homebuyer must use the property as their primary residence. Additionally, an FHA-approved appraiser must appraise the home to ensure it meets standards. Borrowers need a minimum credit score of 580 to qualify for a 3.5% down payment. However, buyers with credit scores between 500 and 579 can still qualify if they provide a 10% down payment.
FHA loans also require mortgage insurance, which buyers can pay upfront or annually. This insurance protects lenders in case of default, making lenders more willing to approve applicants who may have lower credit scores. Borrowers should factor in this cost when calculating their budget, as it can increase monthly payments.
Many people choose FHA loans because they have flexible credit score and debt-to-income ratio requirements. This accessibility makes them appealing to those with financial histories that might not meet conventional loan standards. Buyers can use FHA loans not only to purchase a home but also refinance an existing mortgage or renovate a property. These options give borrowers more flexibility and open up more opportunities for those looking to buy or improve a home.
While FHA loans offer clear benefits, borrowers should consider the costs and requirements carefully. The mortgage insurance requirement and potential fees can add expenses over time. Buyers should weigh these factors against conventional loan options to determine the best choice for their financial situation. With proper planning, these loans can be a practical path to homeownership.
Federal Housing Administration (FHA) backed loans offer low down payment options and more flexible eligibility requirements than Conventional Loans.
For first time homebuyers, borrowers who don’t have a lot of cash on hand, or those who don’t have the best credit, the FHA program can make your homeownership dreams a reality.
With FHA loans, your down payment can come from savings, a financial gift from a family member, or a forgivable loan* through a down payment assistance program.
All loans are subject to credit approval.
*Silverton Mortgage is authorized to originate FHA loans, but it is not an agent of, or affiliated with, the U.S. Government.
*Some programs may require repayment.
Example of 96.5% LTV (3.5% Cash Down) FHA Loan Program with $200,000.00 sales price. $196,377.00 loan amount (including upfront mortgage premium) – 30-year fixed rate loan with zero points based on 360 monthly payments at $1,323.03 each (P&I only). Monthly payments do not include required mortgage insurance, taxes, insurance premiums or other applicable escrows. Actual payment amount will be higher. 3.5% cash down payment of $7,000.00 required. Example assumes 680 credit score and includes $1,425 origination fee, 8.113% APR, and 7.125% interest rate as of 9/1/2023. Rate, fees, other charges and terms subject to change. Available loan programs and terms will vary by state.