If you’re not sure you can afford a typical down payment for a conventional home mortgage, you may want to consider an FHA loan. Loans through FHA generally involve a lower down payment as compared to conventional loans; however, the loan amount may have limitations.
How does an FHA loan work?
The FHA does not technically extend the money to the borrower; rather borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. Created as part of the US National Housing Act of 1943, the FHA loan was designed to help stabilize the nation’s home financing system. FHA guidelines are generally not as strict as government-sponsored enterprises like Fannie Mae and Freddie Mac.
Highlights of a FHA Home Loan
FHA Sample Loan Scenario
- The floor loan limit for FHA home loans is $314,827 from January 1, 2019. In high-cost areas, the new FHA loan limit ceiling is $726,525.
- Down payment options as low 3.5%, give you the option to have a lower down payment and closing costs with an FHA home loan.
- FHA home loans allow you to use certain types of gift funds for your down payment and closing costs.
- Use an FHA loan to purchase or refinance your home, repair or remodel your new home purchase, or to refinance and remodel your current home.
APR current as of 6/6/2018 is subject to change daily without notice and assumes a minimum FICO score of 720. No HOA fees on an owner-occupied single-family residence. Monthly payment includes mortgage insurance but does not include taxes and any other insurance; the actual monthly obligation will be higher. Loan amount based on an LTV of 96.50%. UFMIP of 1.75% - $4,221.87. Closing costs for a 30 year fixed rate loan estimated to be $6,109.00
||30 years fixed rate
|Est. Monthly Payment: