FHA

Federal Housing Administration (FHA) Loans

Thomas Jefferson was a firm believer in the power of home ownership to lift people out of poverty, and to give them enough security so that they might be able pursue life, liberty, and happiness. This, after all, has become the cornerstone of the American Dream.

The federal government has made it a point since 1934 to help American’s realize the dream of home and property ownership by offering loans with low interest rates, and lower than conventional down payment requirements.

For many years, these loans have been offered through the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration, FHA.

Federal Housing Administration (FHA) Loans

Being a sole proprietor of a business, a contract worker, freelancer, or otherwise self-employed can be a struggle. You are charged with being solely responsible to insure that the flow of work and income is maintained, taxes are paid, and customers and suppliers are kept happy. It can be a major chore just staying afloat, and the same goes for many other borrowers who are paid on an irregular basis.

The FHA Loan Program

An FHA loan is a loan insured by HUD, but offered by your lender. This type of loan is typically available with either an adjustable rate or a fixed rate. Loan repayment periods can be set at ten, fifteen, twenty, twenty-five, or even thirty years, depending on the borrower.

The loans feature lower than usual down payments, lower than average closing costs, and relaxed credit rating requirements that may make purchasing a home easier for some borrowers.

FHA loans are great for first-time homeowners and can be used on single-family homes or to purchase multi-family properties that feature up to four units. FHA loans can be used to purchase manufactured and mobile homes (with or without property), and you can bundle any energy improvement costs with the loan.

The FHA even operates a reverse mortgage program for seniors who are interested in using the equity they’ve built up in their property during the later years in life.

Down Payment, Mortgage Insurance, Credit and Other Requirements

With an FHA loan, your down payment can be as little as 3.5%. Loans are available to those who have less-than-perfect credit; even some people who’ve been through bankruptcy and foreclosure can qualify. Because of these eased restrictions, FHA Loans currently have the highest cost of mortgage insurance when compared to all other loan types.

Upfront and annual mortgage insurance must be obtained and maintained by the borrower. But, upfront mortgage insurance may also be rolled into the total loan amount. Additionally, only owner-occupied homes are eligible for FHA-backed financing. Second homes, time-shares, and vacation homes, however, are not eligible.

FHA Loans May Be the Easiest Path to Homeownership

If you are a first-time buyer or you have a short or challenging credit history, and you will be living in the home you are looking to finance, an FHA-backed loan is most likely your easiest and least expensive path to home ownership. Only veterans enjoy lower rates and easier qualifying conditions through the Veteran’s Administration loan program.

The low down payment requirements and guaranteed interest rates are a win-win for just about any prospective homebuyer. Get in touch with Options Financial Residential Mortgage today to see if you qualify – your dream of owning a home could be right around the corner.