FHA Loans
It's easy to understand why many people looking for a new home are turning to FHA insured loan programs. Because FHA Loans are insured by the Federal Housing Administration, homebuyers have an easier time qualifying for a mortgage. Those who typically benefit most by an FHA loan are first-time home buyers and those who have less than perfect credit.
How FHA Loans Work
At Blue Sky Mortgage we want to help you understand how a FHA mortgage loan works. In all actuality the Federal Housing Administration (FHA) doesn't loan any money, they insure it. This means that you're considered to be a less risky borrower than someone who might not have the backing of the federal government. Our role is to make sure that you qualify for an FHA mortgage and structure your loan to reflect it.
Whether you are trying to determine if you qualify or if you are interested in finding out what kind of documentation you'll need to ultimately get your loan, our site can provide you the information you are seeking.
FHA Qualification Requirements
In order to qualify for an FHA loan, a borrower typically needs to meet this criteria:
- Proven employment status of at least 2 years
- Steady or increasing income over a 2 year period
- History of on-time payment with 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 filing
- 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
- The property must be your primary residence
An important resource for considering a FHA loan is the official Housing and Urban Development website. There you can find even more answers to questions and learn more about insuring your loan through the Federal Housing Administration.
As FHA Loan specialists we can help you understand any new changes to the FHA loan program. We're here to create a customized solution that works best for you and your family.
FHA Benefits
Easier to Qualify
Government backing makes approval more likely
Low Down Payment
Only 3.5% down required, gifts accepted
Poor Credit OK
Lower credit scores can still qualify
Better Rates
Government backing provides competitive rates
FHA Loan Common Questions
FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans get into homes.
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. Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation: Calculate the total cost of the refinance Calculate the monthly savingsDivide the total cost of the refinance (#1) by the monthly savings (#2). This is the "break even" time. If you own the house longer than this, you will save money by refinancing. Since refinancing is a complex topic, consult a mortgage professional.
The recommended debt-to-income ratio for a FHA loan is 30%.
Yes, however be sure to check the pre-payment section of your contract before signing.
No, not all FHA loans are automatically assumable; while FHA loans are typically assumable, the buyer must still qualify with the lender, and the specific mortgage documents and lender approval determine if an assumption is possible. FHA loans are generally free from due-on-sale clauses, a key factor allowing for assumption.
Yes, in fact FHA mortgages often require you to carry mortgage insurance for longer than most conventional loans.
Yes, however you might be required to fix certain problems in the home before you can get the full loan. Speak with us today for details on this.
Looking for an FHA Loan?
FHA insured mortgages are some of the best kinds of mortgages available because they can help more people into the home buying market. Let our FHA loan specialists help you understand any new changes to the program and create a customized solution that works best for you and your family.