FHA Loans

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Mission Valley, CA

FHA Loans Are Often The Best Option For Home Buyers

The Federal Housing Authority has recently relaxed the restrictions on FHA Insured Loans. Now, the appealing attributes of an FHA Loan such as low down payment, lower qualification standards, superior interest rates, etc., can be taken advantage of by a larger percentage of home buyers. Those interested in FHA Loans will find a form located to the right of this article. Fill it out and a representative will be in touch to discuss the benefits of an FHA backed loan.

For years, FHA Loans were seen as restrictive and antiquated. They imposed strict guidelines on which homes could be approved for a loan. Loans were declined because the windows of a home were painted shut. FHA insured loans also had a hard cap on the amount of money that could be loaned. The loan amount allowed was often not sufficient to purchase a house at market price. These concerns are all in the past. Now FHA Loans are some of the best available to home buyers.

FHA Loans Have A Lower Downpayment Requirement

Government backed loans such as an FHA Loan require a substantially lower downpayment than conventional loan. Conventional loans require 5-10% down. FHA Loans require as low as 3% down. The lower the downpayment the easier it is for the homebuyer to qualify for the loan.

FHA Loans Have Lower Interest Rates

This is not entirely accurate. Those with near perfect credit can get a lower interest rate than an FHA Loan, but few people have perfect credit. FHA Loans have a single interest rate for all mortgagees. This rate is not affected by credit score. If a would-be homeowner is approved, they get the standard rate. This rate is generally within .5% point of the rate charged for conventional loans for well qualified borrowers .

FHA Loans Allow For Homeowners To Carry A Higher Debt Ratio

Typical conventional loans only allow a homeowner’s mortgage payment to be 28% of their monthly gross income or less. FHA Loan payments can be up to 29% of the homeowner’s gross monthly income. For most conventional loans, the total monthly debt cannot exceed 36% of monthly income. FHA Loans allow up to 41%.

There are other benefits such as the ability of the seller to cover closing costs, the ability of those with no established credit history to get approval, and lower homeowner insurance rates. If a potential homeowner is interested in learning more they should complete the form to the right so a representative can discuss your options with you.