An FHA home mortgage loan is a loan insured against default by the Federal Housing Administration. The program came about during The Great Depression as a way to encourage home-ownership during hard financial times. The FHA loan program is still around today and borrowers of all types can still take advantage of all that FHA has to offer.
Because the FHA insures that loan, lenders are more willing to work with borrowers who may not qualify for conventional loans. The qualifying guidelines are much more flexible that other types of loans, especially in regard to credit history. Borrowers with a less than perfect credit history may still qualify under FHA guidelines.
Some of the basics to an FHA mortgage are:
- No borrower income limit
- More credit score flexibility
- Only 3.5% down payment on Purchase loans
- Higher debt-to-income ratios (on DU, desktop underwriter, approvals)
- Can finance home of 4 or fewer units
- Great track record—programs in effect since 1934
- Bankruptcy: Two years Chapter 7 from the date of your bankruptcy discharge, borrowers can obtain an FHA loan, provided you have since maintained good credit
- Foreclosure: Three years after the final date of foreclosure, borrowers can obtain an FHA loan, provided you have since maintained good credit
FHA loans are ideal for first-time home buyers because of the lower down payment options and more flexible qualifying guidelines. FHA also offers a refinance program for current homeowners. With an FHA home mortgage loan, you can refinance up to 97.5% of your home’s value or an FHA cash-out refinance of up to 85%. Contact one of Home Point Financial’s experienced mortgage professionals to see if an FHA home mortgage loan is right for you or apply online to be pre-approved.
*Home Point Financial Corporation is not affiliated with the United States Department of Housing and Urban Development or any other governmental agency.