FHA Loans
An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate income borrowers, FHA loans require a lower minimum down payments and credit scores than many conventional loans.You can borrow up to 96.5% of the value of a home with an FHA loan, with a down payment of 3.5%. With FHA loans, your down payment can come from savings, a financial gift from a family member or a grant for down-payment assistance.
An FHA loan requires that you pay two types of mortgage insurance premiums—an Upfront Mortgage Insurance Premium (UFMIP) and an Annual MIP (charged monthly). The Upfront MIP is equal to 1.75% of the base loan amount. You pay this at the time of closing, or it can be rolled into the loan. If you’re issued a home loan for $350,000, for example, you’ll pay an UFMIP of 1.75% x $350,000 = $6,125. The payments are deposited into an escrow account set up by the U.S. Treasury Department, and the funds are used to make mortgage payments in case you default on the loan.
Pros
- Relaxed credit requirements
- Low down payments
- Lower reserve funds
- Increased income to debt ratio
- Clients with history of bankruptcy may still qualify
Cons
- Up-front mortgage funding fee
- Monthly mortgage insurance for the life of the loan
- Stricter property standards
- Smaller loan limits
A FHA Loan might be good for you if….
- If you’re in the market for a loan with lenient credit
- You want to put down lower down payment
- Have low-to-moderate income
Ready to talk to one of our local St Marys loan specialists about a FHA loan on a home in Camden County? Get in touch today!
Call Now
Call us today to get started!
Start Online
Get started now with our online form.