FHA Home Loans

FHA home loans are a type of home loan product aimed at providing flexible and affordable monthly payment and down payment options.  While many first time home buyers are often able to take advantage of FHA home loans, you can use a FHA financing regardless of how many homes you’ve owned or financed.  The main restriction is that you plan on living in the home and will occupy as your primary residence.  FHA loans are unique because they are insured by the Federal Housing Administration and are underwritten based on the specific FHA guidelines.  The great news is that the FHA guidelines are in many ways more forgiving than other loan products that do not have the backing of the Federal Housing Administration.

FHA Loans – Flexible Guidelines Make Home Buying Simple

The flexible qualifying guidelines are one of the greatest advantages of FHA home loans.  This flexibility could help create a path to financing your home with less hassle and restrictions.  Here are some of key areas that flexible FHA home loans can benefit you:

  • Own a home with as little as 3.5% down
  • Gifts are allowed for down payment and can also include closing costs and prepaid items
  • Credit scores as low as 600 are acceptable for a FHA home loan
  • Get access to the best FHA interest rates with credit scores of 660 or higher – Conventional loans require a 740+ score to get the best rates
  • Buy a home more quickly after Bankruptcy/Foreclosure/Short Sale – As little as 2 years
  • Seller can contribute up to 6% towards closing costs and prepaid expenses (taxes, insurance, etc.)

There are many other reasons that FHA loans may be the best home loan option, but will ultimately depend on your unique goals and direction.  The Home Purchase Review is a great way to find out if FHA is the best loan option.

How Do I Know If I Qualify for FHA Home Financing?

As you know by now, FHA home loans have many unique features and advantages.  That means it’s extremely important that you select a lender knows and specializes in FHA.  Your loan specialist will help you assess your goals and take the steps in the home loan process to find out if you qualify and become pre-approved to finance a home.

Before you close on your new home purchase, your home loan package must be reviewed and approved by a FHA DE (Direct Endorsement) Underwriter.  A DE underwriter has undergone a lengthy approval process and has been designated to endorse and approve a FHA loan application package.  Make sure you select a loan company that has DE underwriters on their staff.  They will help speed up your loan approval process and allow you to save money with access to the best FHA interest rates.

FHA Loan Types – Section of the Act?

FHA home loans area available for nearly all residential home types.  Whether purchasing a single family home with FHA financing or buying a condominium (condo) with a FHA loan, the Federal Housing Administration has developed a product that fits your needs.  The products are outlined by what FHA calls, Section of the Act.  Here’s a brief overview of the most common FHA loan types.

  • FHA 203(b) – the most common type of FHA loan is the 203(b).  The 203(b) loan type encompasses nearly all FHA loans for single family homes and town homes.  The 203(b) can be structured as a fixed rate or an adjustable rate mortgage (ARM).
  • FHA 234(c) – condo loans are available under FHA Section 234(c).  Condominium loans through FHA can sometimes be difficult to approve since the condominium project itself also has to be approved.  If you think you may be using a FHA condo loan, it’s best to start by searching the FHA Approved Condo List to see which condominium projects are available for a FHA 234(c) in your area.
  • FHA Streamlined 203(k) – the “FHA 203(k)s”  carries the same benefits as other types of FHA loans, but also allow for a fast and efficient way to finance home improvements or upgrades to the home before you move in.  The only downside is that repairs are typically limited to those being required by the FHA appraiser or those repairs listed in the Property Condition Report of HUD-owned homes.
  • FHA 203(k) –  FHA 203(k) offers a way for homeowners to do extensive rehab work and updates to their home while financing the costs of the repairs and other home improvements into the FHA mortgage.  The repairs are not limited to the same specifics as the streamlined 203(k), however, the 203(k) can carry a higher interest rate and/or higher upfront cost compared to more traditional FHA loan types.

Is FHA the Best Home Loan Option?

The best home loan is not going to be the same for everyone.  Where a conventional home loan may be the best fit for some, millions of American families and individuals depend on the flexibility that FHA provides on your path to home ownership.

Have more FHA loan questions or interested in starting the home loan process?  Always feel free to call our office at 972-499-0454 or Apply Online to speak with one of our home loan specialists.