FHA benefits are available to all homebuyers, not just first-time buyers! If you are purchasing a home that you intend to live in as your primary residence, FHA may be the solution that you are looking for.
These loans are issued by federally qualified lenders. The U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development (HUD), insures FHA loans.
Top 5 FHA Benefits
Low Down Payment.
FHA mortgages have low down payment requirements. Most borrowers can qualify with as little as 3.5% down.
FHA loans are generally easier to qualify for than conventional loans. You do not need to have perfect credit. Furthermore, there may be options available for borrowers with a recent bankruptcy or foreclosure.
Loans from FHA also provide the benefit of allowing higher debt-to-income ratios than most other loan programs. This means that borrowers with high monthly payments, such as large student loans, may be able to qualify using FHA.
Buyers can choose from fixed and adjustable-rate mortgages, finding a solution that works best for their situation. FHA loans can be obtained for a 15 or 30-year loan term.
Homebuyers can use FHA financing on 1-4 unit properties, HUD approved condos, and manufactured homes.
Gifted Down Payments.
Some borrowers may qualify for an FHA loan using gifted funds as a down payment. This means that your down payment could come from a relative or approved organization.
If you are planning to use a gift as your down payment, it’s important to let your loan officer know immediately so they can verify your eligibility and can advise you on the proper steps to follow.
FHA Benefits: What else do you need to know?
FHA loans are an ideal solution for many homebuyers.
Depending on your financial situation, but especially for borrowers with lower credit scores, FHA loans may offer a lower base interest rate than a comparable conventional loan.
These loans are assumable. This means that when you sell your home, a qualified buyer may be able to take over your existing loan and maintain your current interest rate. This can be a great selling point when interest rates rise.
Also, FHA allows for non-occupant co-borrowers. This means that you can obtain a home loan with someone who does not plan to live in the home.
A great benefit of FHA loans is that there are no income limits. However, there are loan size limits that are based on whether the home is a single-family home or a duplex, triplex, etc.
The 2023 maximum mortgage limits are as follows:
- $472,030 – one-family home
- $604,400 – two-family home
- $730,525 – three-family home
- $907,900 – four-family home
- Certain high-cost living areas of the country offer higher maximum loan limits.
An FHA mortgage is the ideal solution for many homebuyers. If you’re ready to get the process started, give us a call at 877-892-8222 or apply online! We will review your information and let you know what loan program will provide you with the most benefits based on your unique situation.
Originally published April 26, 2021, updated Sept. 6, 2023