FHA Loans
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What is an FHA Home Loan?
Ready to buy your first home? Working with limited income or money for a down payment? A government-insured Federal Housing Administration (FHA) home loan could be the right solution for you. FHA loans have been helping people buy homes, whether the first or the fourth, since 1934.
What are the Benefits of an FHA Loan?
FHA home loan programs typically help first-time homebuyers, seniors or others with limits on what they can afford. FHA home loans offer:
A low 3.5% down payment
Flexible income and credit requirements
Low closing costs
Are There Limits to an FHA Loan?
Some FHA home loans have a loan value cap based on location, but keep in mind that the typical FHA candidate already has financial limits. That makes this less of an issue. The program has no minimum credit score, although the lender might, and the chances of approval get better as the scores get higher.
FHA Fixed Rate Home Loans
There are two types of fixed FHA mortgage rates (offer the same rate throughout the life of the loan):
30-year fixed rate FHA
15-year fixed rate FHA
Both options offer the same interest rate stability, but the 15-year term has higher monthly payments, giving you a faster way to build up home equity. You can use this higher equity as a down payment when you move to your next house.
The 15-year alternative also gives you greater power to move. With a higher monthly payment, you build up more equity in the house sooner. This means you can use proceeds from a house sale to make a bigger down payment on a future purchase.