If you have a low credit score or minimal downpayment, you may have heard that a government loan is a good option. But how true is that? Here’s what you need to know about FHA loans and whether it’s the right option for you.
As mentioned above, FHA loans are government-backed loans. The Federal Housing Administration (FHA) insures these loans. Because the bank is guaranteed to recoup their money should the borrower default, banks are now able to fund loans at favorable rates to borrowers who are considered “risky.”
So while called an FHA loan, the FHA is not the entity funding the loan --banks are!
FHA loans have more lenient qualification requirements and are available only through FHA lenders. This is also true about FHA refis.
Here’s more interesting facts --Chapter 13 bankruptcy doesn’t automatically disqualify you! If it’s been 2 or more years since the discharge date of the bankruptcy, you can apply for an FHA mortgage.
Not really a catch, but there are some things you need to be aware of. FHA loans come with a sort of “built-in” mortgage insurance. It’s similar to private mortgage insurance, FHA mortgage insurance is paid in two parts, the first one is upfront as part of your closing costs and the rest is paid monthly as part of your mortgage payment.
However, unlike private mortgage insurance (which can be canceled once you’ve paid the mortgage down to 80% of the appraised value) FHA mortgage insurance lasts the life of the loan.
FHA insurance is often the determining factor on whether an FHA is the right choice for a particular borrower. The monthly FHA mortgage insurance payment can last anywhere from 11 years (if your downpayment is at least 10%) or the entire life of the loan (if you put the minimum of 3.5% down). The end cost can vary depending on the amount of the loan, and sometimes an FHA loan may not be the best loan for you.
But in most cases, where the first-time homebuyer is purchasing a moderately priced home and planning on staying there for at least 5 years, an FHA loan is THE best choice for home financing.
Whether an FHA or another loan, we’ll match you with a home loan that makes sense for you financially and otherwise. Start the pre-qualifying application located here on our site, and we’ll be in touch soon with personalized, stress-free mortgage guidance.
We've been helping customers since 2008 afford the home of their dreams, one client at a time and we love what we do. We stand by our client for life philosophy.
Company NMLS: 75239
25241 Paseo De Alicia Suite 230
Laguna Hills, CA 92653
Our Website strives to ensure that its services are accessible to people with disabilities. Our Website has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Our Website makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows 1stpacificcapital.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
The Our Website accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Our Website continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Our Website website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Our Website website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: firstname.lastname@example.org