ABOUT FHA LOANS
If you have credit challenges, an FHA loan may be the right answer for you, especially if you have been through a foreclosure or bankruptcy. An FHA loan is a mortgage that is insured by the Federal Housing Administration. This FHA insurance allows lenders such as Fairway to provide home loans with down payments as low as 3.5% of the purchase price.
The less restrictive guidelines allow borrowers who may not qualify for a conventional loan to refinance and consolidate debts into a low, fixed-rate loan. These loans usually have higher debt ratio allowances, which can make a difference when you have steady income but have debt from college loans, credit cards, etc.
FHA Loan Eligibility
Home loans insured by the Federal Housing Administration (FHA) can make it easier for you to qualify to purchase or refinance a home. This loan option offers flexible qualification guidelines to help people who may not qualify for a conventional mortgage. FHA loans are widely used by first-time homebuyers and people with low-to-moderate incomes.
Advantages of an FHA Loan
This government-insured mortgage features:
- Low down payments
- Flexible income and credit requirements
- Fixed- and adjustable-rate mortgages
- Loans for 1-4 unit properties and condos may be available
- Down payment funds can be a gift from a relative or employer*
- Home sellers can contribute up to 6% of the closing costs
MORE ABOUT FHA LOANS
To learn more about FHA Loans and see if this is the best option for you, please see the frequently asked questions below.
- FHA Adjustable-Rate Mortgages
- FHA Fixed-Rate Mortgages
- Streamlined Refinancing for FHA mortgage holders
FHA’s adjustable-rate mortgage (ARM) insures home purchases or refinances with rates that can change after the initial fixed-rate period. Depending on market fluctuations after this initial fixed-rate period, your monthly payments could change due to rates increasing or decreasing. An ARM could be the right choice for you if you plan on staying in your home for just a few years, you’re expecting a future pay increase, or the current interest rate on a fixed-rate mortgage is too high
Fixed-rate mortgages protect you against rising rates since the interest rate remains the same for the entire term of the loan. With FHA loans, you can select a 30-, 20- or 15-year term. The main difference is the lower term options have higher monthly payments, which also means you are building home equity faster. Keep in mind you can use equity as a down payment for your next home or a future cash-out refinance. If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you.
If you currently have an FHA mortgage, we may be able to help you reduce your interest rate and lower your monthly mortgage payments with an FHA streamlined refinance. Plus, a streamlined refinance requires limited borrower credit documentation and underwriting for an even easier process. This may be the right solution if you want to convert your ARM to a fixed-rate loan.
Fairway Independent Mortgage Corporation loan officers would be happy to walk you through the process of applying and securing an FHA loan. Contact us today and we will get started!