FHA Loans, or Federal Housing Administration Loans, are meant to help low-to-middle-income borrowers purchase homes. Requirements for qualifications are less stringent for FHA Loans than they are for conventional mortgages, so if you think you may not qualify for a conventional mortgage, ask our mortgage lenders about your eligibility for an FHA Loan.
FHA Loans are home loans that are backed by the government, and that allows mortgage loan lenders the extra flexibility they need to offer these loans to less-qualified borrowers. An important feature of FHA Loans is that you may qualify for them even if your credit is less than stellar. For a conventional mortgage, you generally need a credit score of at least 620, but for an FHA Loan, you may qualify with a score of 580.
When you get an FHA Loan, you can put as little as 3.5% down. While you can technically put 3% down on a conventional mortgage, borrowers rarely qualify for a down payment that low. Additionally, if you can put down more than 3.5%, you may qualify for an FHA Loan with a lower credit score.
In exchange for these amazing benefits, borrowers who go with FHA Loans must pay a mortgage insurance premium (MIP) monthly to protect the mortgage lender. If you put 10% down, you only have to pay MIP for 11 years, but if you put less down, you must pay MIP for the life of the loan.
Remember, however, that if your financial situation improves over time, you can attempt to refinance your home loan at some point and get a conventional mortgage that may offer more advantageous terms..
Call PRMI McKinney, Texas’s favorite mortgage loan lenders, to find out if you qualify for an FHA Loan.
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