WHAT IS A FHA MORTGAGE
An FHA mortgage is a type of home loan that is insured by the Federal Housing Administration. FHA mortgages are designed to make it easier for people with lower credit scores or smaller down payments to qualify for a home loan.
FHA mortgages are popular among first-time homebuyers who may not have a large down payment or a high credit score. These loans typically require a down payment of only 3.5% of the purchase price. FHA loans also have more flexible credit requirements, allowing borrowers with lower credit scores to qualify.
In addition to lower down payment and credit requirements, FHA mortgages also offer competitive interest rates and lower closing costs than conventional loans. However, they do require borrowers to pay an upfront mortgage insurance premium (MIP) as well as an annual MIP, which increases the overall cost of the loan.
FHA mortgages can be used to purchase a primary residence or to refinance an existing mortgage. However, there are limits on the amount that can be borrowed which is changing all the time, and the property must meet certain minimum property standards.
There are a few reasons why you may choose to get an FHA mortgage, including:
1. Lower credit score requirements: FHA loans may be easier to qualify for if your credit score is lower than what is typically required for a conventional loan.
2. Smaller down payment: FHA loans typically require a lower down payment than conventional loans, which can make it easier for some borrowers to qualify.
3. More flexible qualifying guidelines: FHA loans have more lenient guidelines for debt-to-income ratios, which can benefit borrowers who have a higher debt load.
4. Streamlined refinancing options: FHA loans have a streamlined refinancing option that can make it easier and less expensive to refinance your mortgage.