Traditional Home Financing
FHA Loans
FHA Loans are designed to make homeownership more accessible with low down payment options, lower credit score requirements, and down payment/closing cost assistance with paired programs
What is an FHA Loan?
An FHA Loan is a mortgage insured by the Federal Housing Administration (FHA). Because these loans are backed by the government, they often offer more flexible qualification requirements than Conventional Loans, making them a popular choice for first-time home buyers and borrowers with limited savings or lower credit. Unlike Conventional Loans, FHA Loans can only be used for a primary residence.
Highlights
FHA Loan features
Reduce your upfront costs
Pair your FHA Loan with down payment assistance
For some, a 3.5% down payment is still a lot. Eligible borrowers may be able to combine an FHA Loan with a down payment assistance program to reduce upfront costs. Programs such as Buyer's Choice and Home Select can help eligible borrowers purchase a home sooner with less money out of pocket.
Benefits:
- Up to 3.5% or 5% of the loan amount for your down payment and eligible closing costs
- 3-year or 5-year forgivable assistance options, and 10-year repayable option
- Could cover your entire down payment and some closing costs
Who could benefit
Is an FHA Loan right for you?
FHA Loans are often a great fit if you...
- Are buying your first home
- Have limited savings for a down payment
- Want a low down payment option
- Would benefit from more flexible credit requirements
- Are purchasing a primary residence
FHA Loan Limits
How much can I borrow with an FHA Loan?
FHA Loan limits are established annually by the U.S. Department of Housing and Urban Development (HUD) and vary by county. If you're purchasing in a higher-cost area, you may qualify for higher FHA Loan limits.
Mortgage Insurance Premiums
Understanding FHA mortgage insurance
FHA Loans require mortgage insurance premiums (MIP), which help protect the lender and make FHA financing available to more home buyers. The amount you pay depends on factors like your loan amount, down payment, loan term, and when your loan originated. Unlike Conventional Loan mortgage insurance, FHA mortgage insurance is not cancellable. There are two types of mortgage insurance you’ll pay with an FHA Loan:
Upfront Mortgage Insurance Premium (UFMIP)
An upfront premium that's typically financed into your loan, so you don't usually have to pay it out of pocket at closing.
Annual Mortgage Insurance Premium (MIP)
An annual premium that's divided into monthly payments and included as part of your monthly mortgage payment.
Still Not sure if an FHA Loan is right for you?
If you’re still not sure if an FHA Loan is right for you, we’d be happy to talk. Either contact us or get started on your preapproval and to see how much you can afford, and we can talk best loan fit after.
FAQ
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
FHA Loans are available to qualified borrowers who meet FHA and lender requirements. They are often a good option for first-time home buyers, borrowers with limited savings, and those seeking more flexible credit requirements.
Most FHA Loans accept credit scores as low as 580. Some FHA down payment assistance programs, such as Home Select, are available to eligible borrowers with a minimum 600 FICO.
Yes. FHA loans require both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP), which is typically included in your monthly mortgage payment.
Mortgage insurance requirements depend on factors such as your down payment, loan amount, and when your loan originated. Your loan officer can explain your options, including whether refinancing into another loan program may make sense in the future.
Yes. Eligible borrowers may be able to pair an FHA loan with down payment assistance programs such as Buyer's Choice or Home Select, which can help cover your down payment and eligible closing costs.
No. FHA loans are intended for owner-occupied primary residences and generally cannot be used to purchase vacation homes or investment properties.
No. While FHA loans are popular with first-time home buyers, they are also available to qualified repeat buyers purchasing a primary residence.
Resources
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