FHA LOANS
ALL ABOUT FHA LOANS
All America Funding has a variety of loan options, where FHA loans are the most popular and convenient to most buyers.
FHA (Federal Housing Administration) loans are insured by the U.S. Department of Housing and Urban Development. These loans are intended to assist individuals or families with low credit scores and limited financial resources in becoming homeowners.
Below are some basic facts about FHA loans:
- Down payments for FHA loans can be as low as 3.5%. This is a much lower down payment than conventional loans require.
- FHA loans require a mortgage insurance premium (MIP) to be paid upfront, as well as annually. Mortgage insurance premiums are paid by the borrowers. MIPs protect the lender if the borrower defaults on the loan.
- Although FHA loans have more flexibility with credit requirements than other mortgage loan types, they do require a minimum credit score of 580. Having a 580 credit score will typically be required to qualify for a 3.5% down payment option. Borrowers with scores between 500-579 may be eligible but will need to make a higher down payment.
- FHA loans are more flexible in terms of debt-to income ratio than conventional loans. The maximum debt-to income ratio allowed is typically around 43%.
- FHA loan requirements are specific to the property being financed. For example, the property must meet certain minimum standards or be the primary residence of the borrower. To qualify for an FHA mortgage, it’s crucial that the property meet these criteria.
APPLYING FOR FHA LOANS
- Begin the prequalification. In this step, your financial situation will be evaluated, including your income, debts and credit history. You can apply for a loan if you meet all the requirements.
- Provide us with all the required documents. These include income verification, bank statements and tax returns.
- Order a property appraisal for the property that you are planning to buy. The appraisal determines the value of the property and ensures it meets FHA requirements.
- Wait for our underwriting team to evaluate the risk, and decide whether or not to approve your loan.
- After your loan has been approved, you’ll move on to the closing stage. You’ll receive your keys and sign all the paperwork required.
Keep in mind that FHA loans are not suitable for all borrowers. To find the right financing for you, it’s important to compare your options and don’t hesitate to call us with any questions to evaluate your best mortgage loan options!