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What Are FHA Home Loans?

California FHA loan

FHA Loans are known to be among the most lenient home loan options that a buyer has to use. They are regarded as such because they are backed by Federal Housing Administration, which means it is insured to a certain limit by the government itself. The county the property is in also plays a role in financing. For example, loan limits in San Diego county are lower than in Orange County. This is what makes these loans popular with the lenders: FHA home loans have quite a few more advantages for borrowers as well like just 3.5% down on an owner-occupied 2-4 unit property.

You should apply for an FHA loan if:

  • 1) If you're a first homebuyer, (have not owned a home in past 3 years)
  • 2) You wish to keep monthly payments low
  • 3) You don't really have a great credit score (below 680) and you have difficulty qualifying for a conventional loan.

  Refinancing Your FHA Loan?   See What You Need

How Does an FHA Loan Benefit Me?

There are many benefits of applying for an FHA loan. Here are some of the most significant benefits one will notice when during the application process.

  • 1. Easier Qualification
    Because of the backing from the government, the lender is more susceptible to make the loan work.
  • 2. Lower Rates
    FHA loan rates are generally much lower than conventional loans because of the insurance granted by the government.
  • 3. Lower Credit Scores
    Poor credit is generally why most of the people fail to qualify for conventional loans, but this isn't a problem as far as FHA loan requirements are concerned. Some programs go as low as 580
  • 4. Stability
    FHA loans have been here since 1934, so they are very dependable.
  • 5. Protection
    If times get tough in the future economically for you, FHA loans are one of the best loan products to help you keep the house.

Keeping the above-mentioned benefits in mind, applying for an FHA home loan can be a real lifesaver for people.

What Am I Required to Have?

There are certain requirements that a borrower has to fulfill in order to apply for an FHA loan.

  • You shouldn't have had a bankruptcy in the past two years and should have a good credit for at least two years after filing for bankruptcy.
  • No foreclosure in the last three years and good credit following those tough years
  • At least three years of stable income
  • A proof of payment of all bills
  • Should be able to put down 3.5 % of the property's purchase price
  • Should be willing to cover 2.25 % in closing costs
  • Monthly payment should be around 30% of your income.

If you are able to meet the above-mentioned requirements, you can apply for an FHA loan.

Which Type of FHA Loans Are Available?

With minimal regional differences based on the county, FHA offers the following financing on their loans:

  • Fixed Rate Loans
    This type of loan offers home buyers a fixed monthly installment throughout the life of the mortgage. Therefore, you know the installment in advance and can arrange a budget for it.
  • Adjustable Rate Loans
    The ARM or Adjustable Rate Mortgage provides the flexibility to go for lower interest rates for the low initial period of time and then switch to higher market rate or the reverse process.
  • Purchase-Rehab Property Loans (203K)
    Sometimes it such happens that your dream house requires a lot of reworking and in such cases, fixer-upper loans come to the rescue. This specialized loan includes both the mortgage as well as repair costs.

You can pick any of the above-mentioned types of loan options for your FHA loan. That being said, if you need to find a loan program to get into a home, then starting with an FHA loan is one of the best possible options to do.

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1st Nationwide Mortgage Corporation
65 Enterprise
Aliso Viejo, CA 92656
(949) 207-3399

An Equal Housing Lender -   NMLS #1281

© 2005-2016 1st Nationwide Mortgage Corporation. Trade/service marks are the property of 1st Nationwide Mortgage and/or it's subsidiaries. All rights reserved. * 1st Nationwide Mortgage offers these products through our family of companies. Purchase loans and Refinance loans are available for Jumbo mortgages , 30 year fixed, 15 year fixed, FHA loans, VA loans, HARP loans and Reverse Mortgages. *All of the scenarios listed above are subject to various credit debt to income ratio requirements that are subject to change without notice. This is not an offer for extension of credit or a commitment to lend. Loans subject to approval. Rates and programs subject to change without notice. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is not an offer to enter into a rate lock agreement under CA law, or any other applicable law. CA Loans made or arranged pursuant to California Finance Lender Law License 603K287 and CA Bureau of Real Estate, Real Estate Broker - Broker#01517084, (213)620-2072, California Department of Corporations, Alaska #AK1281, Colorado Mortgage Company Registration, Florida MLD1423, Texas SML #1437886, Oregon Mortgage Lending License ML-5326, Virginia #MC-6675, Washington Consumer Loan Company CL-1281 NMLS Consumer Access.

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