FHA Loans
(Federal Housing Administration)

FHA Loans

  • 3.50% Down Payment
  • Down Payment Assistance Available (Restrictions Apply)
  • 580 Minimum Credit Score
  • Loan Terms from 10 to 30 Years
  • Down Payment Can be Gifted
  • 1.75% Upfront Mortgage Insurance Premium
  • Financed into Loan Amount
  • 0.55% Monthly Mortgage Insurance
  • Remains for Life of Loan (if Down Payment is < 10%)
  • $472,030 Maximum Loan Amount (Jefferson County)

FHA purchase loans are mortgage loans insured by the Federal Housing Administration (FHA), a government agency within the U.S. Department of Housing and Urban Development (HUD). These loans are designed to make homeownership more accessible for first-time buyers and borrowers with lower credit scores or limited down payment funds.

Here are some key features of FHA purchase loans:

  1. FHA Insurance: FHA purchase loans are insured by the FHA, which means that if the borrower defaults on the loan, the FHA reimburses the lender for the loss. This insurance provides lenders with more confidence to offer loans to borrowers with less-than-ideal credit or smaller down payments.
  2. Down Payment: One of the advantages of FHA loans is the lower down payment requirement. The minimum down payment for an FHA purchase loan is typically 3.5% of the purchase price. This is lower than the down payment required for most conventional loans, which usually starts at 5%.
  3. Credit Requirements: FHA loans are known for accommodating borrowers with lower credit scores. While specific requirements can vary among lenders, borrowers with credit scores of 580 or higher may qualify for the 3.5% down payment option. Borrowers with credit scores between 500 and 579 may still be eligible but may need to make a larger down payment, typically 10%.
  4. Mortgage Insurance Premium (MIP): FHA loans require borrowers to pay an upfront mortgage insurance premium (UFMIP) at closing, typically 1.75% of the loan amount. In addition to the UFMIP, borrowers are also required to pay an annual mortgage insurance premium (MIP) as part of their monthly mortgage payment. The MIP amount depends on the loan term, loan-to-value ratio, and other factors.
  5. Loan Limits: FHA sets loan limits for different counties, which determine the maximum loan amount that can be borrowed in a particular area. These limits are subject to change and are influenced by the housing market and property values in each region.
  6. Property Requirements: FHA loans also have specific property requirements. The property being purchased must meet certain standards regarding safety, security, and habitability. An FHA-approved appraiser will assess the property to ensure it meets these guidelines.

FHA purchase loans can be a viable option for borrowers who may not qualify for conventional loans due to lower credit scores or limited down payment funds. It's important to work with an FHA-approved lender who can guide you through the loan process and provide accurate information about eligibility, requirements, and loan limits.