FHA Loans are a great option for all types of buyers. They offer low rates, flexibility on the down payment, and easier qualifications to get approved.

Homebuyers have several mortgage choices when it comes to financing their home. One of the most popular mortgages today is FHA loans. The FHA loans came into being with the goal of increasing homeownership by providing buyers with a cheaper and more convenient alternative to most traditional mortgage loans and by simplifying the purchasing process.

First, it should be noted that FHA does not actually lend homebuyers money directly. FHA only insures the loan with approved lenders and banks against loss. FHA loans are made to homebuyers through FHA approved lenders. FHA loans are meant to help people by offering lower mandatory down payments. This is great for first-time homeowners that have minimum savings.

The FHA loan program was initially developed in the 1930s as a way to help the housing market gain traction and it has helped millions of buyers purchase a home that would have otherwise not qualified for traditional conventional financing.

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Here are some just some of the benefits of choosing a government-backed FHA loan:

  • Low Down Payment: The main advantage of an FHA loan is the low down payment.  The down payment for FHA loans starts at 3.5%, which works out to be a very cost-effective option for first-time homeowners. The especially true considering most conventional loans require 5-10% down payment.  The loan is also very flexible because the down payment can come in the form of a gift from family.
  • No Hidden Fees: Just like all government-backed mortgages, FHA loans are a very transparent option for homeowners. Unlike subprime home loans which led to numerous issues in the year past, the FHA loan does not have any hidden charges, excess fees or sudden spikes in interest rate. Interest rates for FHA loans remain some of the lowest available today.
  • No Saving Or Reserves Required: At the time of closing, most traditional mortgage loans require the applicant to show that they have adequate cash reserves on hand. This usually is a deterrent for most middle-class homeowners, as they are required to show thousands in savings in addition to the money that is required for closing costs and down payment. However, the FHA loan has no such requirement.
  • Credit Flexibility: FHA permits lower credit scores when compared to standard conventional loans. Many borrowers can get approved with credit scores as low as 600, sometimes even lower with larger down payment amounts.
  • Greater Borrowing Potential: The FHA loan is very liberal as it provides the applicant with greater flexibility in regards to debt-to-income ratios. Using this benefit to your advantage, some buyers can qualify by spending nearly half their gross income on all your monthly obligations.
  • Readily Available: FHA loans are readily available to qualified buyers nationwide. The program is not exclusive for just first time home buyers, any qualified buyer can obtain an FHA loan.
  • Approved Properties: Nearly all single-family homes, townhomes, and many condos are eligible for FHA financing.
  • Great Refinance Options: FHA also offers rate & term reduction refinance along with cash-out refinance programs.

FHA loans do have limits depending on the location of the property. Some counties are classified as “high cost” therefore the loan limits are greater. Example for Texas: Harris County FHA loan limit is currently set to $356,362 in 2021. FHA Loan Houston Texas, The Woodlands, Spring, Conroe, Clear Lake, Tomball, Katy, Fort Bend, Harris County, Montgomery County, Kingwood.

Note: these limits apply to one-unit properties, multi-unit properties are higher, please find the complete list of Texas FHA Loan Limits Here.

FHA Mortgage: The most popular first-time buyer program remains the FHA loan. The FHA loan is a government-backed loan and one of the easiest types of mortgage loans to qualify for. In addition, buyers can have less-than-perfect credit and still qualify.  Below we have listed the benefits of the program, and things to consider.

  • FHA mortgages are great because they allow a maximum of 96.5% financing, the homebuyer only needs a 3.5% down payment. This can be a big plus for first time home buyers since they often don’t have a lot of money set aside specifically for purchasing a home.
  • The FHA program permits the home seller to pay buyers closing costs – up to 6 percent.
  • The down payment money can come from a variety of sources including HUD down payment assistance grants.
  • The down payment money can also come from a gift from a family.
  • Those with less than perfect credit may still be able to qualify: For traditional mortgages, a borrower will generally need a minimum credit score greater than 640 depending on the credit profile as a whole. We will help determine the min score needed in these instances.
  • FHA also permits generous debt to income ratio limits, higher than any other loan program.  Please learn more about FHA loans here.

With interest rates hovering around all-time low levels, it’s a great time to purchase. Call us direct or fill out the Quick Quote info located on this page.