This mortgage is designed primarily for first-time homebuyers and allows the borrower to put a lower down payment and have less than perfect credit. Seller can contribute up to 6% of the purchase price to the buyer towards closing costs.
What are FHA Mortgages?
FHA mortgage loans are very competitive loan programs. FHA mortgages allow the homebuyer to put down as low as a 3.5% down payment AND have less than perfect credit. Because the Federal Housing Authority insures your mortgage, Inlanta Mortgage may be more willing to give you loan terms that make it easier for you to qualify. Other benefits of the FHA mortgage loan program may include:
- lower closing costs
- down payment can be gifted to the homebuyer
- available on 1-4 unit properties
- cash reserves not required
- closing costs can be paid by seller
- flexible qualifying debt to income ratios
- streamline refinance available
FHA Mortgage loans can be fixed-rate or adjustable rate mortgages, but the majority are fixed-rate mortgages.
How is an FHA Mortgage Structured Compared to Other Mortgage Loans?
FHA Mortgage loans require a mortgage insurance premium to be collected at closing (upfront MI) and an annual premium is collected in monthly installments. The FHA mortgage insurance premium is not the same as your homeowner’s insurance and is required of all borrowers with less the 20% LTV. A typical monthly mortgage payment on a FHA mortgage loan includes principal and interest, taxes, monthly insurance premium (MIP), homeowners insurance (assuming you have elected to make monthly payments on your taxes and homeowners insurance).
FHA Streamline Refinance
In order to refinance using the FHA Streamline Refinance program, your mortgage must already be FHA insured. The mortgage to be refinanced should be current (not delinquent). The refinance is to result in a lowering of the borrower’s monthly principal and interest payments. No cash may be taken out on mortgages refinanced using the streamline refinance process. Contact a mortgage loan professional near you to discuss FHA Streamline Refinance opportunities.
The U.S. Department of Housing and Urban Development (HUD) maintains a comprehensive FHA Resource Center. Visit the HUD/FHA Resource Center’s database of Frequently Asked Questions.