FHA Loans
The
FHA loan program was created to increase homeownership. The FHA program
makes buying a home easier and less expensive than other types of home
loan programs. The program was designed for first-time home buyers but
is available to all buyers.
The FHA loan program requires a down payment of only 3.5% of the sales price.
A borrower may be able to obtain 100% financing if they qualify for
down payment assistance, or it can a gift from family, or a secured
loan against other assets. The seller can pay up to 6% of the
closing costs, more than enough to cover your transaction costs.
The
minimum credit score for an FHA loan is 620, making it the easiest to
qualify for. FHA will allow a home purchase two years after a bankruptcy
or three years after a foreclosure.
There
is a 1.75% MIP (Mortgage Insurance Premium) funding fee with every FHA
loan that is added to the loan amount. Additional mortgage insurance
must be paid for at least five years and can be cancelled when the loan
amount reaches 80% of the value of the home.