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FHA Loans What is an FHA Loan? It is simply a loan that is guaranteed by the Federal Government, specifically, the Federal Housing Administration. Why get an FHA Loan? Because this loan is guaranteed by the government, it
allows lenders to be more flexible with credit and borrower
qualifications. FHA requires only a 600 score. Conventional requires a 660 with anything less than 20% down. Conventional loans have rate increases on a sliding scale for everyone who has less than a 740 score. FHA's rates are usually better than Conventional for anyone who doesn't have a 740 score or lots of money to put down. FHA allows a low down payment of just 3.5% and the seller can pay up to 6% of the sales price towards your closing costs. This results in much less money needed to buy a home with an FHA loan. FHA allows all of the money needed to come from a gift. Conventional loans place a lot of restrictions on gifts and the minimum amount you need to have of your own. I have done many FHA, Conventional and VA loans in the past 18 yrs. Other than the 4 yr period from 2003 thru 2007 (where Conventional was the preferred loan program), FHA has been the loan of choice for most buyers. Although I still evaluate all options, with the recent changes to PMI, Conventional financing and the switch to a buyer's market, FHA loans typically offer the best value for my clients. Of course, everyone's situation and qualifications are different and I will suggest other options if it looks like they would result in a lower monthly payment or costs. As always, please feel free to call our Approval Hotline 1-888-929-9445. Sincerely,
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