I am sure everyone has heard the buzz about FHA loans by now. I have been able to help many home buyers and homeowners refinance in the Philadelphia area with the FHA program. What is FHA? It is essentially a government mortgage insurance company. FHA doesn’t actually loan money, they insure a lender against losses they may suffer if the borrower defaults, which encourages lenders to make loans to people who they would otherwise consider to risky. If an FHA loan results in default, the government will take the brunt of the loss and the lenders loss is significantly reduced.
HUD has specific underwriting requirements for who is eligible for an FHA loan. The two big requirements are:
- Full documentation for all borrowers (pay stubs, w-2’s, bank statements, etc.)
- The property must be either a primary home or second home…no investment properties
The benefits of the FHA program are:
- No credit score requirements (FHA does not require a specific score, but individual lenders do. We can go as low as a 580)
- only 2.25% down on a purchase and up to a maximum of a 6% sellers assist (this is huge for buyers with little cash)
- Very competititve interest rates.
FHA is a great option for buyers and those looking to refinance out of less favorable loan terms.
If you liked my post, feel free to subscribe to my rss feeds
BlogoSquare