What is an FHA Loan?
An FHA home loan is insured by the federal government and offered by FHA approved lenders. FHA loans make buying a house more affordable with competitive interest rates, low down payments, and flexible credit requirements.
You can also refinance your home with an FHA loan. If you have an existing FHA mortgage, you may be able to take advantage of the streamline refinancing program which features less paperwork and faster closing.
Freedom Mortgage is the #1 FHA lender in the United States according to Inside Mortgage Finance, 2020.
FHA Loan Benefits
Compared to conventional loans, FHA loans generally have smaller down payments and more flexible underwriting standards. As a result, an FHA loan can help you buy or refinance a home when you have less cash on hand or less than perfect credit. Benefits of FHA loans include …
- Competitive interest rates from private lenders because FHA loans are backed by the Federal Housing Administration.
- Affordable down payments starting as low as 3.5% of the purchase price.
- Flexible credit score requirements which can go as low as 540 if you make a larger down payment.
- Fixed-rate mortgages available with terms between 15 and 30 years.
- Streamline refinancing for qualified homeowners with existing FHA loans. Streamline refinances feature less paperwork and faster closings.
Note when you get an FHA loan, you will need to pay an upfront mortgage insurance premium which is currently 1.75% of the loan amount. You will also need to pay annual premiums, which typically run between 0.45% and 1.05% of the loan amount.
FHA Loan Eligibility
To qualify for an FHA loan, you need to:
- Be a U.S. citizen
- Have a steady income
- Have established a credit history from making payments on credit cards, car loans, student loans, or other bills
- Have an acceptable debt-to-income ratio, which should not exceed 43% for most borrowers
- Use the home as your primary residence
- Stay within the loan limits for FHA mortgages
- Buy a home that meets FHA property requirements for health, safety, and soundness
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