FHA Insured Loans
Many Americans dream of owning a home and must consider how to qualify for loans and save for down payments. FHA Insured Loans (also known as FHA loans) have helped many people realize this dream. The Federal Housing Administration (FHA) insures these types of loans. Many FHA loans come with low down payment options and have less stringent credit score requirements than other types of mortgages. Nancy Meek at VIP Mortgage Inc. in Scottsdale, AZ is an experienced professional that can help you learn if you qualify for an FHA loan.
Essentials of FHA Loans
Created during the Great Depression, FHA loans were a government program to help make it possible for struggling residents to purchase a home. In addition to helping borrowers, the FHA program provides security for lenders if a borrower defaults on their mortgage. FHA loans are popular since they usually only require 3.5% of the home purchase price as a down payment. Generally, FHA loans will not be made to people with credit scores lower than 500. Many homebuyers can obtain low monthly payments. It is important to have any student loan or income tax payments current when you qualify. Securing an FHA loan requires an inspection of the home you plan to purchase as well.
An FHA loan is a non-conventional loan because it is insured by a government agency. All FHA loans require the purchase of mortgage insurance no matter the size of your down payment. Two mortgage insurance premiums (MIP) are required with each home loan. The first is an up-front premium of 1.75% of the purchase price that is added to your total mortgage amount at closing. The second premium is due as part of your monthly mortgage payment. This premium will fall between .45% and 1.05% of your annual mortgage balance. Borrowers will have different rates depending on various factors including total loan amount, length of the mortgage, and loan-to-value (LTV) ratio.
Do you own a Fixer-upper?
Many buyers are purchasing older homes that will need major to minor repairs. Borrowers may obtain and FHA 203(k) loan to purchase a home while rolling repair costs into the mortgage itself. Some of the types of repairs you can make using an FHA 203(k) loan are:
- Repairing bathrooms
- Improving or replacing floors
- Replacing and upgrading plumbing
- Mounting add-ons like decks and patios
- Installing air conditioning or heating systems
You must get a precise estimate of repairs needed to determine if you qualify. Your total loan may end up being based on the increased value of your home after repairs are completed.
Purchase your First Home Today
Nancy Meek and VIP Mortgage Inc. has helped many Arizona residents realize the dream of homeownership with an FHA loan. Nancy is a trusted professional here to help you meet your goals. Call her Scottsdale, AZ office today.