What are FHA loans?
FHA loans are loans that are insured against default by the Federal Housing Administration (FHA). This great loan program makes it simple for those who may not qualify with other programs. FHA typically offers lower interest rates, lower income requirements, and does not hold as much weight to your credit score compared to other loan programs also know as conventional loans.
FHA loans are an attractive option, especially for first-time homeowners:
- Generally easier to qualify for than conventional loans.
- Lower down payment requirements.
- Cannot exceed statutory loan limits as set by each county.
- HUD 203(B) MORTGAGE INSURANCE
What is the purpose of this program?
To provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD.
What are the eligibility requirements?
- The borrower must meet standard FHA credit qualifications with a minimum of a 580 credit score.
- The borrower is eligible for approximately 96.5% financing. The borrower is able to finance the upfront mortgage insurance premium into the mortgage.
- Eligible properties are one-to-four unit structures.
Texas FHA Loans
Here in Texas FHA loans are a great option with great rates, zero lender fees (exclusive with Texas Premier Mortgage), and a low down payment option Based upon your goals and financial situation, we’ll help identify if this loan is right for you.
The Texas FHA loan program, is a great option if you’re a first-time homebuyer and repeat home buyer and would like to take advantage of the market conditions in the current real estate environment but, may not have perfect credit or haven’t saved enough money for a larger down payment for conventional loan programs. And since the program is managed by the Federal Housing Administration, you can be sure that the loan you receive will be the best loan available.
Texas FHA Loan Benefits
Texas FHA loans require only 3.5% of the purchase price as a down payment (due at the closing of the loan), while many loan programs require a full 5% or more, which can save buyers between $10,000 and $50,000 depending on the purchase price of the home. The 3.5% down payment can be gifted from a relative or employer.
Borrowers applying for a FHA insured loan must have a minimum 580 FICO score. Compared to any other loan program, FHA is the easiest to qualify for, credit wise. Those whose mid-FICO scores are below 580 but not lower than 500 can still qualify for an FHA-insured loan as long as they have at least 10% to put down but, the approval could require more evaluation of creditworthiness with extra assets, reserves or lowered debt ratios.
There are maximum loan limits for loans issued against the Texas FHA loan program, so potential borrowers should check with their county limits before beginning their house hunting. The Federal Housing Administration works hard to ensure that regardless of where buyers are, they will be able to afford a modest home in their particular area, so the maximum loan limit is adjusted in areas which have a higher cost of living. $331,200 is a typical loan limit throughout Texas.
“I don’t have a large down payment, and have concerns about my credit”
Other detailed information: A down payment of 3.5% is required on all FHA transactions. If you don’t have these funds saved up a down payment can come from a family member as a gift towards the purchase of the house. The donor has to provide the source of the money being used as a “Gift Fund” to the borrower and gift letter will need to be signed. Texas Premier Mortgage will help facilitate this process to ensure all required paperwork is submitted.
The debt-to-income requirement allows the borrower to have a higher back-end ratio as compared to other loan programs. FHA will go as high as 55% DTI; no other loan program in the market subscribes to this rule but FHA. Texas Premier Mortgage can go as high as 57% back-end ratio to qualified borrowers.
Benefits of FHA loans vs Conventional financing
- You can buy a home with low/no down payment or closing costs
- Your down payment can be gifted from family or received through other government programs.
- Easy credit qualifying for great interest rates even with lower credit scores.
- Fixed rate programs to help budget your income and prevent foreclosure.
- Qualify even if you have had bankruptcy in the past.
Texas FHA Mortgage Loans is the easiest mortgage and most lenient loan to qualify for. They offer a low down payment and are available to homebuyers with less than perfect credit.
For more information about FHA loans, their benefits and loan options and how it may apply to you, please contact us direct at 281-627-4222 or submit the quick quote form on this page.