FHA Loan Program
The Federal Housing Administration, generally known as FHA, provides mortgage insurance on loans made by FHA-Approved lenders. The FHA does not make home loans; they insure the FHA loans that we can assist in getting you. FHA mortgage insurance provides lenders with protection against losses as a result of homeowners defaulting on their mortgage loans.
FHA loan differs from the Conventional loan in the following areas:
- Income – FHA loans allow additional non-owner occupying co-borrowers to be on the application to assist the buyers in qualifying for the loan.
- Assets – Do not have to come from the borrowers own funds. These funds can be a gift from a family member.
- Equity – FHA loans can be as high as 97% of the purchase price and 95% for refinancing, both have no additional cost to the borrowers.
- Credit – Poor credit history in the past or not having any credit scores will not prohibit a potential borrower from getting an FHA loan. Each file is manually underwritten. FHA underwriters look at many other factors outside of just credit.
- Seller Concessions – Sellers are able to contribute up to 6 percent of the mortgage amount up to a maximum loan amount of 103% of the purchase price.
- Assume-ability – FHA loans can be assumed by another borrower as long as they meet the FHA lending requirements. This is a great asset when current interest rates are higher than the rate on the seller’s assumable mortgage note.