- The Federal Housing Administration (FHA) was developed as part of the National Housing Act of 1934 with the goal of improving the housing market. To accomplish this goal, the FHA insures home loans offered by approved lenders. This insurance allows lenders to offer great rates and terms on home loans while protecting them from borrower default. Access Capital Group Inc. offers great rates on FHA loans in Washington, California, Arizona, Colorado, Florida, Idaho, Oregon, Wyoming, Minnesota, New Mexico and Utah.In addition to great rates, FHA loans have relaxed qualification requirements compared to conventional loans. Down payment requirements can be as low as 3.5% as well. For this reason, FHA loans are often a top choice among first-time homebuyers. A first-time homebuyer could potentially qualify with a credit score of 580 and a down payment of only 3.5%. Family members can even offer the cash needed for the down payment as a gift.
FHA Loan Requirements
- Credit Score – A credit score of at least 580 is required. It is to qualify with a score between 500 and 579 with a down payment of 10%.
- Debt-to-Income Requirements – A debt-to-income (DTI) ratio of 43% or less is needed. A DTI ratio of up to 50% may be approved in special cases.
- Down Payment – 3.5% of the purchase price if credit requirements are met.
- Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.
FHA loans are limited to certain amounts based on the market. In low-cost markets, loans are limited to $294,515 and in high-cost areas, the loan limit is 679,650.
FHA loans and other government-backed loan programs are made possible by mortgage insurance. Two mortgage insurance premiums (MIP) are required with every FHA loan. The first is an up-front premium of 1.75% of the purchase price. This premium is added to your total mortgage balance at closing. The second premium is due as part of your monthly mortgage payment and fall between .45% and 1.05% of your annual mortgage balance. Each borrower will have a different rate depending on various factors including total loan amount, length of the mortgage, and loan-to-value (LTV) ratio.
FHA loans also available for refinances and special renovation projects. Cash-out refinance and streamline refinance programs are available to homeowners who currently have an FHA loan. Credit scores as low as 500 may be accepted for refinances as well. To protect borrowers, streamline refinancing is only available if the borrower will save money through the refinance process. The FHA 203k loan is a unique type of home loan allows a borrower to combine the purchase of a home and the cost of renovations and repairs into a single mortgage
Whether you are a current homeowner researching FHA refinancing options, or a first-time homebuyer looking to purchase your very first home, we can help. Access Capital Group Inc. offers great rates on FHA loans in Washington, California, Arizona, Colorado, Florida, Idaho, Oregon, Wyoming, Minnesota, New Mexico and Utah.