FHA Loan Benefits

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FHA insured mortgages are some of the best kinds of mortgages available. This is because they can help more people into the home buying market. Check out the list below to understand some of the most basic benefits of an FHA mortgage.

Easier to Qualify for – because they’re backed by the federal government lenders are more likely to give you the kind of loan that you need.

Low Down Payment – FHA insured mortgages only require a 3.5% down-payment which makes it easier for people to own homes. Additionally the 3.5% can come in the form of gifts, unlike many other loan programs.

Lower Credit Borrowers Qualify – because FHA insured loans are backed by the government those with a poor credit history have an easier time getting this kind of loan.

Better Interest Rates – with the backing of the government these loans typically have a better interest rate than most traditional mortgage loans.

Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times. The will work with you to help your home from falling into foreclosure. Always try to work out problems with your lender before the situation becomes dire.

New Changes in FHA Loans

In response to the growing housing situation in the United States the loan limits for FHA Loans has been temporarily raised. Depending on where you live you might find it even easier to qualify for a FHA loan. 

Qualifying for an FHA Loan

Qualifying for a home mortgage loan can be difficult, near impossible without a sizable down payment and a moderate credit report. If this describes you and you financial position, an FHA loan may be for you! There are fewer restrictions for FHA loan qualification in comparison to a standard mortgage loan. Qualifications for an FHA loan are:

• Proven employment status of at least 2 years.
• Steady or increasing income over a 2-year period.
• History of on-time payment. No more than two missed payments on your credit.
• If you've filed for bankruptcy you must wait at least 2 years and have good credit since you filed.
• Those with foreclosures must wait at least 3 years since the most recent foreclosure.
• Monthly mortgage payment should be roughly 30% of your gross income.
• You must pay a minimum of a 3.5% down payment.
• Only certain properties are eligible - single-family homes, condominiums, double-wide manufactured homes, modular homes and 2-4 unit properties.
• The property must be your primary residence.

When you're applying for an FHA loan the following list of documents will help expedite the process.

• Past two years completed tax returns.
• Past two years W-2's, 1099's and any other necessary tax forms.
• One month worth of newest pay stubs.
• Self-employed will need three years tax returns and YTD Profit & Loss Statement.

Savings Info

• Past three months full bank statements for all accounts.
• Any recent statements from investment accounts (retirement, 410k, mutual funds, etc.).

Personal Info

• Driver's License or other official State identification.
• Social Security Card.
• Any Divorce, Palimony, Alimony Documents.
• Green card or work-permit (if applicable).

Check out our list of common questions related to FHA mortgages. Check out our list of common questions related to FHA mortgages.

What is the FHA?

• FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans get into homes.

What makes a FHA insured mortgage beneficial?

• A FHA insured mortgage is easy to qualify for, can be obtained with less than perfect credit, costs less and requires a smaller down-payment.

Where can I find FHA forms and other literature?

• A great source for FHA forms and information is http://www.hud.gov/library/index.cfm.

What is the FHA loan limit in my area?

• The loan limit across the country is different. Click here to see limits in your area.

Can I pay an FHA loan off early?

• Yes, however be sure to check the pre-payment section of your contract before signing.

Can a FHA insured loan help me lower energy costs?

• Yes, through the Energy Efficient Mortgages Program you can finance 100 percent of the cost of making your home more energy efficient.

Can I refinance a fixed rate FHA loan?

• Yes.  Talk with a mortgage professional to see if refinancing makes sense for you.

What is the recommended debt-to-income ratio for FHA loans?

• The recommended debt-to-income ratio for a FHA loan is 31%.

Are FHA loans assumable?

• Absolutely, you can assume an existing FHA loan or allow a buyer to assume yours.

Will I have to pay mortgage insurance with an FHA loan?

• Yes, in fact FHA mortgages often require you to carry mortgage insurance for longer than most conventional loans.

Can I get a "fixer-upper" of a home with a FHA mortgage?

• Yes, however you might be required to fix certain problems in the home before you can get the full loan.

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