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Federal Housing Administration (FHA)

What is a FHA loan?

An FHA loan is a government backed mortgage that is insured by the Federal Housing Administration. These loans have features that make financing more obtainable for first-time homebuyers as well as those with low to moderate incomes.

FHA loans are available to homebuyers whom may have only a little cash saved up for a down payment and those who have less than ideal credit.

While FHA loans allow for a smaller down payment (as low as 3.5%), a down payment is still required. The down payment amount is based on factors such as your credit score and the price the home. For example, a borrower with a 620 credit score will be required to have a down payment of at least 3.5 percent of the home’s purchase price, meaning if the house is $200,000, the minimum down payment would be $7,000.

To know and understand your options, we strongly encourage you to work with an experienced mortgage banker if considering an FHA loan. .

Key Things to Remember

  • FHA loans are great for first-time homebuyers.
  • Buyers must meet FHA lending guidelines.
  • A down payment is required.
  • Mortgage insurance is required.
  • Borrowed money or monetary gifts from family members can be used for down payments and closing costs.
  • FHA loans do not carry prepayment penalties, giving you the flexibility to refinance or pay off your mortgage early without incurring any fees.

To learn more about which loan option is best for you, call to speak with one of our expert mortgage bankers or if you're ready, get started today.

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The above information is for educational purposes only.