What is an FHA Loan?
FHA loans are home mortgages that are insured by the government through the Federal Housing Administration. An FHA mortgage is designed to help more Americans realize the dream of home ownership. They do just that by offering a low down-payment for home purchases, normally 3.5%. FHA mortgages are also popular because they have lower credit score requirements and more flexible lending guidelines compared to traditional loans. For example, an FHA loan allows for more lenient debt-to-income ratio requirements.
What are the Limitations of FHA Loans?
FHA loans have limitations on the amount you can borrow. Each county has it's own FHA Loan Amount Limit based on the median home price. Currently the FHA loan limit for NC and SC is $498,257 in most counties. Higher FHA loan limits are available for multi-unit properties and counties with higher home values. Click here to see the loan limits by county.
FHA mortgages cannot be used to finance a second home, rental home, or investment property. However, you can use an FHA loan to purchase a 2-4 Unit dwelling, as long as you reside in one of the units as your primary residence.
An FHA mortgage does not limit it's loans to those with lower incomes, like USDA loans do. You can be a millionaire and still get an FHA mortgage.
What is the Mortgage Insurance Requirement with an FHA Loan?
There are many benefits to getting an FHA loan mentioned above; however, a drawback is the requirement of upfront Mortgage Insurance, which is 1.75% of the loan amount; however, it can be financed into the loan. Also, just like traditional mortgages with low down-payments, FHA loans require monthly mortgage insurance. The amount of FHA mortgage insurance depends on your loan term and the loan-to-value ratio. If you put down at least 10% of the purchase price, you will only have to pay the monthly mortgage insurance for the first 11 years. If you put down less than 10%, you will pay mortgage insurance throughout the entire loan.
Why should you get an FHA Loan?
The housing market can be tough for first-time homebuyers and others who don't have the resources to meet the more strict requirements of a traditional loan. Additionally, FHA loans offer low interest rates. To Inquire about an FHA Loan, simply click the following Quick Quote. Our team would be happy to assist you!
