What the heck are FHA loans?
Is an FHA mortgage right for you?
Who the heck is the FHA? And why do you hear about it all the time when you start considering buying a home?
The FHA is the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development, and their purpose is to make housing more affordable and more accessible to more Americans. Without them, banks would not be able to offer low down payment lending options or lend to borrowers with less than ideal credit.
If you use an FHA loan, you still get a mortgage through a lender, and the FHA simply guarantees they will pay them your mortgage in the event you default on it. Think of them as a backstop that gives banks confidence to give loans to a wider range of borrowers. These are one of many loan types available to first-time buyers :)
FHA loan highlights ❤️
- As little as 3.5% down payment
- Flexible credit score requirements
- Start building equity sooner!
Who should consider an FHA loan? 🤓
- First-time homebuyers.
- If you don’t have a huge down payment saved but want to become a home owner.
- Have a credit score of 580 or above.
Considerations 🔮
- You will need to pay mortgage insurance over the life of your loan unless you put at least 10% down.
- There are loan limits, which cap the amount you can borrow. AKA your home price must be under a specified amount.
- People with great credit scores might not be rewarded with as low of an interest rate as other mortgages.
See if an FHA loan is right for you with one of our home buying planners
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Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market. While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.