The FHA loan was created in 1934 to lower the barrier to homeownership. We use it every day to get families into homes who'd otherwise be told to "wait a few years and save more." If you have a steady job, decent (not perfect) credit, and a few thousand saved up, this is probably the loan we'd start the conversation with.
An FHA loan is a mortgage insured by the Federal Housing Administration, an agency of the U.S. Department of Housing and Urban Development. The FHA itself doesn't lend you the money. We do. But because the FHA insures the loan against default, lenders can offer better terms to buyers who don't fit a perfectly clean credit profile.
That insurance is the whole point. It's the reason FHA loans accept lower credit scores, lower down payments, and higher debt-to-income ratios than conventional financing. The trade-off: you'll pay Mortgage Insurance Premium (MIP) upfront and monthly for the life of most FHA loans. We'll walk through exactly what that costs in your situation before you commit.
If you're a first-time buyer, a buyer rebuilding credit after a tough stretch, or anyone who's been told "you need 20% down," FHA is usually the conversation worth having first.
Numbers are illustrative only and assume an example interest rate; they're not a quote. Property taxes, homeowners insurance, and HOA dues (if any) are additional. Your real numbers depend on your full financial profile and the rate at the moment we lock. Get a real quote and we'll show you exactly what your scenario looks like.
Possibly, but the rules change. With a credit score between 500 and 579, FHA technically allows the loan, but you'd need to put 10% down instead of 3.5%, and most lenders impose stricter overlays at that level. Below 500, you don't qualify for FHA. Call us before assuming the answer is no, we've seen plenty of borderline files come together.
Two parts. Upfront MIP is 1.75% of the loan amount, charged at closing, usually rolled into the loan rather than paid out of pocket. On a $300,000 loan, that's $5,250 added to your balance.
Annual MIP is paid monthly, typically 0.55% to 0.85% of the loan balance per year depending on your loan-to-value ratio and term. On that same $300k loan, you're looking at roughly $138 to $213 per month added to your payment.
For most FHA loans originated today, MIP stays on the loan for as long as you have it. The escape hatch is refinancing into a Conventional loan once you have 20% equity in the home.
Yes. FHA is unusually flexible on this. Your entire 3.5% down payment can come from a gift, typically from a family member, employer, close friend with a documented relationship, or an approved down payment assistance program. The gift has to be documented with a gift letter stating the funds are not a loan, and we'll need to source the funds back to the giver. We'll walk you through the paperwork; it's not as scary as it sounds.
Single-family homes, townhomes, FHA-approved condos, and properties with up to 4 units (as long as you live in one of them). The property has to be your primary residence and meet FHA's minimum property standards, basically, it has to be safe, sound, and structurally secure. Fixer-uppers can sometimes work through the FHA 203(k) renovation loan, which we can talk about separately.
Absolutely, and many of our clients do. Two common paths: an FHA Streamline Refinance (less paperwork, no new appraisal in many cases, used to lower your rate while staying in FHA) or a refinance into a Conventional loan (often the move once you've built up 20% equity, because it lets you drop MIP entirely). We'll watch the math with you over time and tell you when it's worth running the numbers.
It depends on your numbers. FHA wins if you have lower credit, less savings, or higher DTI. Conventional wins if you have strong credit (typically 700+) and at least 5%-10% down, because you'll often get a better rate and you can drop PMI once you hit 20% equity. We'll run both side by side for you so you can see the actual cost difference over the life of the loan, not just the first month.
Pre-qualification takes about 5 minutes on a phone call. Full pre-approval usually takes 1 to 3 business days once we have your documents. From contract acceptance to closing on the home, FHA loans typically close in 25 to 35 days, similar to conventional. Faster if everything is clean and you respond quickly to document requests.
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If FHA doesn't fit your situation, we have plenty of other programs to walk you through. Each one has its own sweet spot.