FHA loans are mortgages that are insured by the Federal Housing Administration and are a great option for first and second time homebuyers alike.  FHA applicants will enjoy very low interest rates, lower credit score requirements, and a low down payment of 3.5%.  Certain applicants with specific circumstances can also push their debt to income ratio upwards of 50% in order to qualify for funding.  FHA loans can even accept a co-borrower to help a primary applicant qualify or allow for renovations and repairs to be included in the loan amount (See FHA 203K in the Renovation section of our site)!

While FHA interest rates are some of the lowest on the market, there are additional costs to be aware of.  A mandatory monthly mortgage insurance premium is added to your total monthly payment and the cost is regulated by the FHA.  Whether you have an 800 credit score or a 600 credit, you will receive the same premium rate.  Additionally, there is another mortgage insurance premium known as the Up Front Mortgage Insurance Premium (UFMIP).  This is a single premium fee that is financed into the total loan amout.  Additionally, if you are purchasing in a community property state, your spouses debt must be considered in the overall loan qualification, even if he or she is not on the loan itself.

FHA loans are a phenomenal tool for homebuyers who either don't have perfect credit and a large down payment, or who have some concerns about documenting income and pushing their qualifying ratios higher than the norm. Contact The Hargrave Group to determine whether an FHA Loan is right for you.

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