FHA LOANS

What Is an FHA Loan? 

An FHA loan is a government-insured mortgage designed to help borrowers who might not meet the stricter requirements of conventional loans.

By insuring the loan, the FHA protects lenders against potential losses if a borrower defaults. This reduced lender riskallows for lower credit score minimums, smaller down payments, and more lenient income requirements.

While FHA loans do require mortgage insurance, this coverage is what makes the program possible — enabling lenders to approve borrowers who might otherwise be turned down for a conventional mortgage.

💡 Simply put: FHA loans make homeownership possible for many buyers who might not yet qualify for a traditional loan.

Requirements 📋

FHA loans are among the easiest mortgage programs to qualify for.
Here’s what most borrowers need to know:

• Minimum Credit Score: As low as 500 (580 for 3.5% down).

• Down Payment: As low as 3.5% of the purchase price.

• Income & Employment: Must show stable income and employment history.

• Mortgage Insurance: Required for all FHA loans (both upfront and monthly).

💰 Total Costs to Expect

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While the minimum down payment is 3.5%, total funds needed at closing often range between 6% and 8% of the home’s price. This includes:

• Down payment

• Closing costs

• Prepaid interest

• Escrow funds for taxes and insurance

Borrowers can use various sources for these funds, including:

✅ Personal savings
✅ Gift funds from family
✅ Down payment assistance grants
✅ Retirement account loans
✅ Seller contributions

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Interest Rates & Loan Options 📈

FHA loans offer fixed-rate and adjustable-rate (ARM) options.
Your interest rate choice affects both your monthly payment and upfront costs:

• Choosing a lower rate may require paying discount points at closing.

• Choosing a slightly higher rate may reduce upfront costs, which can help if you’re short on cash for closing.

Your loan officer can help you compare both options and find the balance that fits your financial strategy.

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Benefits 🌟

FHA loans come with several advantages that make homeownership more accessible:

• 🔹 Flexible credit requirements — ideal for first-time or credit-challenged buyers.

• 🔹 Low down payment — as little as 3.5%.

• 🔹 Lower closing costs compared to many other programs.

• 🔹 Rehabilitation options — buy and fix up a home with a single FHA 203(k) loan.

• 🔹 Assumable loans — allowing a future buyer to take over your FHA loan (a big plus if rates rise).

💬 In short, FHA loans open the door to homeownership for many who thought it might be out of reach.

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Have More Questions? 📞

Wondering if an FHA loan is right for you?
Contact us today or complete our quick pre-approval form, and one of our experienced loan officers will help you compare your options and find the best path to homeownership.