If you have a lower credit score and limited savings, this loan is for you! This is one of the easiest loans to qualify for, making it popular among first-time home buyers.
• At least 580 credit score*
• At least 3.5% down payment
*You can still qualify for an FHA loan with a 500 credit score, but this often requires a higher down payment.
What is an FHA Loan?
This loan type is popular because it is relatively easy to qualify for. With lower credit and debt ratio requirements, many people find that it fits their situation better than a conventional loan.
FHA loans are government-backed loans, specifically insured by the Federal Housing Administration (FHA). All lenders that offer FHA loans must be approved by the FHA. All FHA loans require mortgage insurance (MIP).
What is MIP?
MIP stands for “mortgage insurance premium,” and it protects the lender in case you default on your loan. There is an upfront mortgage insurance premium charged and then you will also pay an annual charge based on multiple factors such as loan length, mortgage amount, and down payment. With an FHA loan, you will pay MIP for the life of the loan, except if you were able to put down over 10%. In this case, you will be required to pay MIP for the first 11 years of the loan.
FHA loans must be within the limit set for your area. These limits change annually, but you can see what the current limit for you is on the FHA mortgage limits website.
Contact one of our helpful loan officers to give you further assistance.