FHA Loans
The Federal Housing Administration (“FHA”) insures loans made by FHA approved mortgage lenders in the United State. If a homeowner defaults on their home loan, the lender is protected by the FHA’s insurance against any losses. The program is used primarily to assist homebuyers purchasing their first home or refinancing their current home. The most common term for this is an FHA loan.
The down payment requirement for an FHA loan may be as low as 3% and you may purchase a single family home, condo, townhouse or building with 2, 3, or 4-units. The program also allows the seller to contribute towards the closing costs and or pre-paids (insurance, tax escrows and pre-paid interest), thereby making it easier to qualify for a loan. Your lender will have more information about these loans for you.
A few reasons why an FHA loan may be for you
Lower interest rates. The lender has less risk because the FHA is insuring the loan.Great for first time homebuyer. A conventional loan often requires 20% for a down payment. An FHA loan has as little as 3% down.Easier qualifications to meet. You don't need a 720 credit score to obtain an FHA loan.
