A FHA (Federal Housing Administration) loan is a government-insured mortgage loan. An FHA loan has features that may make it easier for first-time homebuyers to achieve the dream of homeownership with low down payment options, flexible credit and income guidelines and a fixed-rate. FHA mortgage insurance protects the lender if a borrower defaults on the FHA loan.
Each FHA borrower pays a mortgage insurance premium. The premiums are collected and used by the FHA to reimburse the lender (not the borrower) should the borrower default and the lender must foreclose upon the loan and sustain a loss. This insurance enables a lender to provide loan options and benefits often not available through conventional financing.
Fortunately, the Federal Housing Administration (FHA) requirements for credit scores and down payments are lower than for conventional loans. Borrowers may be able to qualify for an FHA loan with a credit score of at least 580 and a downpayment of just 3.5 percent. FHA loans may allow sellers to pay up to 6 percent of the loan amount to cover buyers’ closing costs.
Meet with MortgageRight.
Not all lenders can offer you a FHA loan, however MortgageRight is a Federal Housing Administration (FHA) approved lender.
- You must prove that you have 2 years of steady employment, showing your income has remained the same or increased.
- You cannot have declared bankruptcy in the past 2 years or had a foreclosure in the past 3 years. If you have, you may not qualify for an FHA loan.
- You must also have the cash to pay the downpayment on your loan which is generally 3.5 percent of the total cost of the loan.
If you feel that you can or are close to meeting these requirements, call a MortgageRight loan officer today!