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FHA Loans

An FHA Loan is a type of mortgage that is backed by the United States Federal Housing Administration. The Federal Housing Administration (FHA) was created in 1934 to help people buy houses that they wouldn’t be able to afford otherwise. Because the federal government is backing the loan, an FHA loan requires a smaller down payment (3.5%), and less restrictive lending standards than a conventional loan. This is a great option for people who haven’t been able to save a large sum of money for a big down payment or who have had issues in the past with their credit.

FHA loans are designed for people who want to own a house, but don’t have enough saved up for a conventional loan. You pay a lot less in the initial down payment with an FHA loan than a conventional loan, so this would be a good option for those types of borrowers. Plus, up to 6% of the prepaid expenses, reserves and closing costs can be paid by the seller. You might have to pay a little bit more in the long run because of higher interest rates and mortgage insurance, but this can be a very affordable way to buy a your dream home a little bit quicker than you normally would otherwise.

The most popular FHA home loan is the 203(b) or the 234(b). These fixed-rate loans often work well for first time homebuyers because it allows individuals to finance up to 96.57% of their home loan, which helps to keep down payments and closing costs at a minimum. These home loans are also the only loan in which 100% of the closing costs can be a gift from a relative, non-profit, or government agency.

FHA loans are extremely popular among first-time homebuyers, but the program is not limited just to first-timers. You can also qualify if you haven’t owned a home for three years. If you sold your home three years ago and have been renting since, you may qualify for the program. The qualifications can vary from state to state, so it’s important to have a local team working on your side that is well versed in the local laws and regulations. Our mortgage bankers are located in Oregon and Washington and licensed in Oregon, Washington and California. They can help guide you through the checklist to see if you qualify for this program.

Another resource that may help in purchasing a home is the NHF Platinum™ Program. The National Homebuyers Fund provides grants that can assist with your down payment. The NHF Platinum Down Payment Assistance Grant can provide assistance up to 5% of the loan amount and can be applied to your FHA loan. To learn more and to see if you qualify, visit our NHF page and talk to one of our mortgage bankers.

Rates and conditions may vary from lender to lender, but Summit Mortgage will guide you through the differences, the pros and cons of the FHA program, and make sure you qualify. Rates will also change based on a variety of factors including the length of the mortgage, the initial down payment, and your credit history. There is not a minimum income requirement in order to qualify for a FHA loan, but debt ratios specific to the state in which the home will be purchased have been put into place to prevent borrowers from getting into a home they cannot afford. This is done through a close analysis of income and monthly expenses.

If you have any questions, Summit Mortgage has a lot of experience in FHA Loans and many other loan options. We can help find the right mortgage program for you!