FHA Mortgages

FHA Home Loans are mortgages insured by the Federal Housing Administration that feature lower underwriting standards and rates than conventional loans,  along with lower minimum down payments of 3.5%.  Additionally, FHA borrowers must pay for mortgage insurance (MIP) to protect the lender in the event of a default. 

FHA Loans are Flexible and Accessible Home buyers today don't often buy homes with 20% down. Low- and no-down-payment mortgages remain popular with first-time buyers and repeat buyers alike. One of the most popular low-down-payment mortgage programs is the FHA loan via the Federal Housing Administration. Nearly 1 in 5 U.S. buyers use an FHA loan to finance a home purchase. The program's popularity, in part, is because buyers can make down payments of just 3.5 percent via the FHA. But, there are other reasons why FHA loans are in demand. Also, to loose underwriting standards, FHA mortgage rates are lower than comparable conventional rates; and a home's subsequent buyer can assume FHA loans. This is especially valuable in a rising mortgage rate environment. 

Call AZ Financial at 480-787-5777 to get your free quote. 

About the FHA Mortgage, The Federal Housing Administration (FHA) was established in 1934, which, in  U.S. history, was a period of "heavy renting." The country was emerging from The  Great Depression. Just 4 in 10 households owned their homes. At the time, the mortgage terms offered by lenders were onerous. To get a  loan meant to make a 50% down payment; to agree to a loan term of 5 years or fewer, and make a large "balloon" payment to the bank after the mortgage's first few years. Few U.S. consumers could meet the terms of a 1930s mortgage. Meanwhile, the government wished to increase the rates of homeownership nationwide. With more homeowners, the government reasoned, neighborhoods would stabilize, and the U.S. economy would get back on track. From this, the FHA and its flagship mortgage program was born. The FHA-backed mortgage's main feature was its Mortgage Insurance  Premium (MIP) program, a self-sufficient insurance fund through which the FHA  could insure the nation's lenders against "bad loans." For a bank to get the FHA's insurance on its loans, it was required to verify that its loans met the FHA's minimum qualification standards. These rules came to be known as the FHA mortgage guidelines. In time, the FHA MIP system gave banks confidence to make better loans with better terms for hopeful U.S. home buyers. Soon, the down payment requirements for a home loan dropped; 5-year loan terms were replaced with longer terms of 15 and 30 years, and mortgage rates dropped. The FHA is currently the largest insurer of mortgages in the world. 

U.S. Home Buyers choose FHA Loans In today's expanding economy, U.S. home buyers have a wide selection of mortgage loans from which to choose. For example, there are conventional loans available via Fannie Mae and  Freddie Mac; Rural Housing Loans available via the USDA; and 100% loans available via Veterans Affairs and its VA loan. Even jumbo mortgages and private loans have made a comeback of late. However, loans backed by the Federal Housing Administration remain in high demand. The FHA loan's combination of low rates, low down payment, and flexible lending guidelines have made it one of the most common loan choices for home buyers today. There are benefits to choosing an FHA loan. Here are some of the biggest. 

Call AZ Financial at 480-787-5777 to get your free quote. 

FHA Mortgage Insurance Premiums It may seem odd to call FHA mortgage insurance a benefit since it doesn't come for free. However, FHA MIP is what makes the FHA program possible. Without the MIP, FHA-approved lenders would have little reason to make FHA-insured loans. The good news is that, as a homeowner or home buyer, your FHA MIP rates have dropped. Today's FHA MIP costs are now as much as 50 basis points (0.50%)  lower per year than in 2014. You have ways to reduce what you'll owe in FHA MIP annually, including using a 15-year mortgage term for your loan; or making a down payment of at least 5 percent. Or, as many homeowners are doing in today's market, you can refinance out of  FHA MIP. 

FHA Allows a 3.5% Down payment. There are only a few mortgage options for today's home buyers that allow for down payments of five percent or less. The FHA is one of them. With an FHA mortgage, you can make a down payment as small as 3.5%. This benefits homebuyers who don't have a lot of money saved up for down payment;  and home buyers who would rather save money for moving costs, emergency funds,  or other needs. 

FHA Allows 100% Gift Funds The FHA is aggressive concerning gifts for a down payment. Very few loan programs will allow your entire down payment for a home to come from a gift. The  FHA will. Via the FHA, your entire 3.5% down payment can be a gift from parents or another relative, an employer, an approved charitable group, or a government homebuyer program. If you're using a down payment gift, though, you'll need to follow the process. 

The FHA Doesn't require an SSN Not every home buyer will have a valid social security number, and, per FHA,  that's okay. FHA guidelines permit loans to employees of the World Bank and foreign embassies, for example. The FHA will also insure loans for non-permanent resident aliens. 

There are Many FHA Loan Products Via the FHA. You can get a mortgage of almost any type. The agency is best-known for its traditional 30-year fixed-rate mortgage, but the FHA also offers a 15-year fixed-rate loan as well as a series of adjustable-rate mortgages (ARMs). Besides, the FHA insures purchase-and-improvement loans for when you want to buy a home that needs repairs; 203k construction loans for when you want to buy new built; and energy-efficiency loans want to finance the costs of energy-efficiency improvements into your loan. The FHA also provides a full line of FHA refinance products. 

Call AZ Financial at 480-787-5777 to get your free quote. 

The FHA Insures All Property types FHA home buyers can purchase any home type in any U.S. neighborhood --  whether in the 50 United States, the District of Columbia, or any U.S.  territory. The FHA will insure single-family detached homes, 2-unit homes, 3-unit homes,  4-unit homes, condominiums, mobile homes, and manufactured homes. 

The FHA Has Flexible Credit Standards Of all the available loan types in today's U.S. market, FHA loans are among the most forgiving concerning credit standards. The FHA does not require "perfect credit" and even instructs its approved lenders to look beyond isolated "credit events" and to consider a borrower's complete credit history -- regardless of credit score. Even borrowers with a  recent foreclosure, short sale, deed-in-lieu, or bankruptcy can be eligible for  FHA financing. Mandatory 3-year waiting periods do not exist with an FHA loan. 

The FHA Allows Extended Loan Sizes A "loan limit" is the maximum allowable loan size for an area. As another  FHA benefit, FHA loan limits can be extended as conventional loan limits are. For example, in Orange County, California, or New York City, the FHA will insure up to $625,500 for a mortgage. For 2-unit, 3-unit, and 4-unit homes, FHA loan limits are even higher, ranging up to $1,202,925. 

FHA Loans are Assumable A little-known FHA benefit is that the agency will allow a home buyer to  "assume" the existing FHA mortgage on a home being purchased. The buyer must still qualify for the mortgage with its existing terms. Still, it can be attractive to assume a home seller's loan in a rising mortgage rate environment. 5 years from now, for example, a buyer of an FHA-insured home can "inherit" a  seller's sub-4 percent mortgage rate. 

The FHA offers Construction Loans Via its 203k program, the FHA offers construction loans to home buyers planning upgrades to a new home; and homeowners planning to make repairs to a home already owned. Via the FHA 203k loan, projects including new roofing, structural additions,  and complete home tear-downs. The 203k loan can be applied to homes in need of minor repairs and fixer-uppers. The FHA is the only federal government agency to issue such a loan. 

Access to The FHA Streamline Refinance Another advantage for FHA-backed homeowners is access to the FHA Streamline  Refinance. The FHA Streamline Refinance is an exclusive FHA program that offers homeowners one of the simplest, quickest paths to a refinance. Via the FHA  Streamline Refinance, there are no credit score checks, no income verifications,  and home appraisals are waived completely. Also, via the FHA Streamline Refinance, homeowners with mortgages pre-dating June 2009 get access to reduced FHA mortgage insurance rates. 

What are Today's FHA Mortgage Rates? For more than 80 years, the FHA home loan program has helped U.S. homeowners purchase homes affordably and refinance them. Compare today's rates and see what an FHA loan can do for you. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.  

Call AZ  Financial at 480-787-5777 to get your free quote.