FHA

The Federal Housing Administration insures loans that allow for buyers to purchase a home with very low down payments.  FHA loans are geared toward first time home buyers, but that is not a requirement.  This program currently has looser guidelines with regard to credit scores and debt-to-income ratios than those generally required for conventional loans.

ADVANTAGES

  • Requires less cash upfront for your down payment and closing costs.  Borrowers can purchase a home for as little as 3.5% out of pocket
  • Available for all income levels
  • Assumability feature allows for someone buying your home from you to take over your FHA loan with no further obligation on your part. This is a very attractive feature for buyers when interest rates are rising.
  • A co-signer can help you qualify even if he or she doesn’t live in the home
  • Minimum 580 credit score
  • Can be used for 1-4 unit homes, primary residences only
  • Very attractive interest rates, even for borrowers with low credit scores.
  • Gift funds can be used for the entire down payment


DISADVANTAGES

  • Borrowers pay monthly mortgage insurance for the life of the loan
  • Upfront mortgage premium is required however this is added to the mortgage principal