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An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). They are popular especially among first time home buyers and some move up buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.
Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 580 or higher. The borrower’s credit score can be between 500 – 579 if a 10% down payment is made. It’s important to remember though, that the lower the credit score, the higher the interest borrowers will receive.
For borrowers interested in buying a home with an FHA loan with the low down payment amount of 3.5%, applicants must have a minimum FICO score of 580 to qualify. However, having a credit score that’s lower than 580 doesn’t necessarily exclude you from FHA loan eligibility. You just need to have a minimum down payment of 10%.
The credit score and down payment amounts are just two of the requirements of FHA loans. Here’s a complete list of FHA loan requirements, which are set by the Federal Housing Authority:
Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 500 can qualify for an FHA loan.
Borrowers who cannot afford a 20 percent down payment, have a lower credit score, or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.
Another advantage of an FHA loan it is an assumable mortgage which means if you want to sell your home, the buyer can “assume” the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.
The Federal Housing Authority sets maximum mortgage limits for FHA loans that vary by state and county. In certain counties, you may be able to get financing for a loan size up to $729,750 with a 3.5 percent down payment. Conventional financing for loans that can be bought by Fannie Mae or Freddie Mac are currently at $625,000.
We can help you find FHA lenders and shop for mortgage quotes for an FHA loan quickly and easily by contacting me at email@example.com. The process is free, easy and we will walk you thourgh the whole process of getting pre-qualified.
Below are today’s average FHA interest rates. You can also use other sites like Zillow to the see FHA interest rates for your particular situation.
|Program||Interest Rate||APR||1 Day Change|
|30-Year Fixed FHA||4.28%||5.34%||-0.01%|
|20-Year Fixed FHA||4.79%||5.99%||0%|
|15-Year Fixed FHA||3.87%||4.98%||0%|
|10-Year Fixed FHA||3.71%||4.99%||0%|
|7/1 ARM FHA||0%||0%||0%|
|5/1 ARM FHA||3.96%||5.47%||-0.01%|
You can now schedule a free consultation with me about the low down payment programs we have for you. We also have low credit score programs with 3.5% down. Schedule Now by clicking Let's Talk