An FHA Loan is a mortgage loan insured by the Federal Housing Administration (FHA). The FHA does not provide the loan; rather, it insures the loan for the lender. If the borrower defaults, the lender can seek recourse from the FHA. This lowers the lender's risk and makes them more likely to issue a loan.
One of the benefits of an FHA-insured loan is low mortgage rates. For single-family homes, down payments can be as low as 3.50% percent, making it possible to afford a higher-priced home than with a more conventional 10 or 15 percent mortgage. The FHA can also help home buyers finance their closing costs, and even offers mortgage insurance.
In addition, the FHA does not allow lenders to charge more than one percent for origination fees (what lenders charge for putting together loan documentation), and has no prepayment penalties, meaning that if you pay off the loan ahead of schedule, you won't be penalized. As with other mortgages, the lender may ask you to pay points, which generally equals one percent of the total cost of the home.
FHA Loan >>>>>
* FHA requirements new borrowers will now be required to have a minimum credit score of 580 to qualify for 3.5% down payment
* FHA loan requirements new borrowers with less than a 580 credit score will be required to put down at least 10%
FHA Credit Score
Requires a minimum credit score of 500 to buy a home or refinance
A collection is minor in nature usually does not need to be paid off as a condition for loan approval
Chapter 7 Bankruptcy at least two years must have elapsed since the discharge date
Foreclosure must have been resolved for at least 3 years
FHA guidelines requires three year past from the date of sale of the property
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