FHA Loans: Making Homeownership Accessible

Loan Program Summary & Highlights

If you're facing challenges such as limited credit history, insufficient savings for a down payment, or the ability to cover closing costs, FHA loans could be the ideal solution. Backed by the Federal Housing Administration, FHA loans offer flexible and borrower-friendly guidelines that make homeownership achievable for many aspiring buyers. These loans are especially popular among first-time homebuyers and those with less-than-perfect credit.

• Low down payment options as low as 3.5%.
• Flexible qualification guidelines, including higher debt-to-income ratios.
• Competitive interest rates for borrowers with lower credit scores.
• Government-insured, providing added security for lenders.
• Both purchase and refinance options available.

What is an FHA Mortgage Loan?

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. These loans are designed to assist borrowers with lower credit scores, limited savings, or unique financial situations. FHA loans are versatile, offering both fixed and adjustable-rate options for purchasing primary residences.

With relaxed credit and income requirements, FHA loans provide an accessible path to homeownership while maintaining competitive interest rates. These loans are tailored to support borrowers who may not qualify for conventional financing, ensuring they have the tools and resources to purchase their dream home.

General FHA Loan Guidelines

• Down payment requirement as low as 3.5%.
• Minimum FICO score of 580 for 3.5% down, or 500 with 10% down.
• Available for primary residences only.
• Seller contributions up to 6% for closing costs.
• Flexible debt-to-income (DTI) ratio guidelines.
• Purchase and refinance options available.

Pros of FHA Loans

• Lower credit requirements: FHA loans allow for credit scores as low as 500 with a higher down payment.
• Small down payment: Only 3.5% of the purchase price is required for qualified borrowers.
• Competitive interest rates: FHA loans often have lower rates than conventional loans for borrowers with lower credit.
• Government-backed security: Provides lenders with reassurance, making it easier for borrowers to qualify.
• Lenient DTI requirements: Higher debt-to-income ratios are accepted, accommodating borrowers with varied financial situations.

Cons of FHA Loans

• Mortgage Insurance: FHA loans require both an upfront mortgage insurance premium (UFMIP) and annual premiums, increasing overall costs.
• Loan Limits: Maximum loan amounts vary by location, which may limit homebuying options.
• Strict property standards: Homes must meet specific requirements, potentially requiring repairs or excluding some properties.
• Primary residences only: FHA loans cannot be used for second homes or investment properties.

Best Candidates for FHA Loans

• First-time homebuyers: Ideal for those with little credit history or limited savings for a down payment.
• Borrowers with lower credit scores: FHA loans are accessible for scores as low as 500 (with 10% down).
• Buyers with limited savings: With down payments as low as 3.5%, FHA loans are accessible to buyers with lower upfront funds.
• Borrowers with higher DTI ratios: FHA loans have more lenient DTI requirements, helping those with lower income qualify.

At One Mortgage Company, our team is dedicated to finding the right loan option for you. Whether you're a first-time homebuyer or looking for an affordable solution to your financial needs, FHA loans could be the key to your new home. Contact us today to learn more about how an FHA loan can fit into your homeownership journey.