FHA Loans
If you want to open the door to your first home, the FHA home loan could be the key.
What is an FHA loan?
An FHA home loan is a government-backed mortgage program that can make it easier for people to become homeowners. FHA mortgage loans are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD).
Since these loans are backed by the FHA, we can provide you with financial flexibility through a low down payment requirement and other benefits. An FHA mortgage loan is especially helpful if you’re a first-time homebuyer or need help qualifying for
FHA loan benefits
What are the benefits of an FHA home loan? If you’re facing certain credit challenges, an FHA loan gives borrowers the opportunity to become homeowners. In general, these loans are less restrictive than other loan types and offer many benefits, including the following:
- Down payments as low as 3.5%
- Lower minimum credit score than conventional loans
- Sellers may contribute up to 6% of the sale price
- A parent or relative can be a co-applicant on your loan as a non-occupant
- Flexible debt-to-income ratios
FHA loan types
You can use your FHA loan to buy a home, refinance an existing mortgage, and renovate or build a home. FHA loans offer a fixed– or adjustable-rate mortgages, offering more flexibility to borrowers. No matter what your specific needs are, we can find your solution.
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An FHA purchase loan is insured by the U.S. government’s Federal Housing Administration, allowing lenders to offer qualifying terms that are less strict than conventional mortgages.
- Low down payments
- Easy credit qualifying
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An FHA streamline refinance allows homeowners to lock down lower rates. With a more affordable payment, borrowers can stay in their home and pay off their loans. Benefits include:
- Lower monthly payments
- No appraisal
An FHA cash-out refinance lets borrowers convert home equity into cash to use for anything from high-interest debt to vacations to large purchases. Benefits include:
- Potential to lower interest rate
- Access to more funds
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An FHA Standard 203(k) loan is ideal for major repairs and construction, including remodeling, landscaping, room additions, and structural repairs — and don’t have the extra mortgage insurance premiums. An FHA Limited 203(k) loan is designed for less expensive repairs and improvements, including energy efficiency, appliances, roofing, and non-structural repairs such as paint.
FHA Standard 203(k) Benefits
- Low 3.5% down payment
- Still only one payment per month (mortgage and improvements)
- This loan qualifies as assumable
FHA Limited 203(k) Benefits
- Low down payment
- No minimum repair cost
- Finance just the cost of the desired necessary projects
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A one-time close construction loan finances the costs of building your own home. They are separate from a traditional mortgage and cover specific building costs including materials, labor, land, and utilities. Then you combine that with your FHA loan and combine it into one loan.
- Single closing
- Low down payment
- Fixed interest rates
FHA down payment assistance programs
FHA loans are a great option to get the best option, especially if you’re building up your credit or are recovering from past credit incidents. Combining your FHA loan with down payment assistance (DPA), can help more people afford the home they want.
These national programs support homebuyers with 3.5% or 5% down payment assistance options for those who qualify. They have flexible guidelines, competitive interest rates and zero down payment options.
FHA specialty programs
There are many specialty FHA mortgage options that have been created to remove some of the barriers to homeownership and make purchasing a home easier for everyone. The following are state-specific programs that focus on certain regions to be revitalized.
FHA HUD $100 Down Program
Exclusively for the purchase of HUD homes, this program gives borrowers the opportunity to pay just $100 for their down payment. It’s an option for those who may not be able to afford a home otherwise.
Benefits
- Very low out-of-pocket expenses
- Can combine programs to pay for repairs
- Eligible properties include 1- to 4-unit homes, manufactured homes, condos, and PUDs
FHA Good Neighbor Next Door
Eligible single-family homes located in revitalized areas are listed exclusively through this program for law enforcement officers, teachers, firefighters, and EMTs.
Benefits
- 50% discount from list price of home
- Must live in property for 36 months as the principal residence
- Flexible financing and equity building
Section 184 Indian Housing Loan Guarantee Program
This program is specifically designed for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities.
Benefits
- Low down payment
- Flexible underwriting
- Can be used for new construction, rehabs, purchase, or refinancing
FHA loan requirements
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When you apply for a mortgage, your income, assets, liabilities, and credit history will be considered. But don’t worry – you can qualify for an FHA mortgage loan with less-than-perfect credit.
To be eligible for an FHA home loan, you must meet FHA mortgage requirements:
- You must have a minimum credit score of 500
- You must have a down payment of at least 3.5%
- 3.5% minimum down payment requires a credit score of at least 580
- You must have consistent employment for at least two consecutive years and verifiable income
- You must be current on all federal non-tax debt
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An FHA home loan may be used to purchase or refinance:
- 1-4 unit homes used as a primary residence
- FHA-approved condos
- Site condos
- Manufactured housing (must be on a permanent foundation)
CrossCountry Mortgage is an FHA-approved lender and is not acting on behalf of or at the direction of HUD/FHA or the federal government. Guidelines are subject to change without notice.
How to apply for an FHA loan
Even though the FHA guarantees loans, they do not provide the funds. You’ll need to go through the same process with your own private lender choice. Follow the steps below to apply for your FHA loan.
6 steps to apply:
- Find an FHA-approved lender
- Fill out an FHA loan application
- Submit your financial and personal documents
- Name and Social Security number
- Valid driver’s license or state-approved ID
- Income and employment history
- Property details, including address and purchase price
- Down payment amount
- Schedule an FHA appraisal
- Await underwriting
- Close on your loan
FHA loan FAQs
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To qualify for an FHA-insured loan, you need a minimum credit score of 580 for a loan with a 3.5% down payment, and a minimum score of 500 with 10% down.
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FHA loans are available from many types of lenders including banks, credit unions, and mortgage lenders that are approved by the Federal Housing Administration.
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Yes, most FHA loans are assumable; however, there are some restrictions and additional rules for FHA-insured mortgages originated since 1986. Depending on the date of loan origination, a creditworthiness review of the borrower may be required.
