FHA Loan Program Options
FHA Mortgage Options
Learn About The Different FHA Home Loan Program Options.
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FHA Home Buying Loans:
The FHA only insures homes that are to be used as a primary residence. You do not necessarily have to be a first time home buyer, but if you have owned a home in the last 3 years, you may not be eligible. FHA home buyer loans can be used for single family homes, as well as for 2-4 unit properties (duplexes, triplexes, and fourplexes).
- First Time Home Buyers:
The FHA offers what is undoubtedly the most popular choice and easiest loan to get approved for as a first time home buyer. Down payments can be made for as little as 3.5%. This low down payment option is part of why FHA loans are so popular throughout the nation. The money for a down payment and any fees associated with the loan (such as an appraisal and closing costs) can be borrowed from a friend or relatives. FHA purchase loans are a great choice (and sometimes the only choice) for home buyers with less than perfect credit or that can not afford to put much money down.
- FHA 203k Construction/Rebab Loan:
The FHA 203k exists solely to finance home purchases for homes that need to be rehabilitated. These are the perfect loans for someone who wants a “fixer upper”. You can purchase or refinance a home and take out a higher loan amount than what it’s current appraised value is. There are two types of FHA 203k loans. There is the FHA 203k streamline which is designed for projects that are not quite as extensive. This program will allow you to borrow an additional $35,000 for various repairs. The standard 203k allows you to borrow for more complex projects requiring structural and other critical repairs. The 203k program is a bit complex and frequently evolves so we encourage you to call to learn more and have your questions answered.
FHA Mortgage Refinancing:
The FHA has two different types of refinance loans. This includes the FHA streamline refinance, which is a quick and easy way to reduce your interest rate and monthly payments. The other option is the FHA cash out refinance loan, which is as it is called, a cash out refinance loan.
- FHA Streamline Refinance
This streamlined refinance program is a very easy loan process, which is purposed to reduce your interest rate and mortgage payment. It does not require a new appraisal, any income documentation to be submitted, or for your credit to be pulled.
- FHA Cash Out Refinance
The cash out refinance program offered by the FHA is a great way to take out equity from your home. You can finance up to 85% of your home’s appraised value. How this works, is let’s say your home is worth $200,000 and you currently owe $100,000. Assuming you qualify, you can cash borrow up to 85% of the value of your home. So you are entitled to borrow $170,000 on a $200,000 home. So after paying off your currently lender the $100,000 loan balance, you would be paid $70,000 at closing.
FHA Mortgage Rate Options:
The loan repayment term is the number of months/years that the mortgage is schedule to be paid off in. Most people choose a 30 year fixed rate mortgage, especially those who are buying a home for the first time and want the security of a long-term fixed rate payment. Others choose an adjustable rate mortgage due to their often lower rates.
- Fixed Rate FHA Loan:
First time home buyers, as well as those who do not have a lot of savings, are recommended to select a fixed rate mortgage. They provide the security of a fixed monthly payment, and rates are excellent on fixed rate FHA loans. You can take out a 30 year fixed or 15 year fixed with FHA loans.
- Adjustable Rate FHA Loan:
ARM stands for adjustable rate mortgage, and after the fixed period of either 1, 2, 3, 5, or 7 years the rate adjusts to the current markets rates. The FHA 5 year ARM is a popular product for some borrowers, such as those who get a FHA 203k loan. It is not advised for many borrowers to take out ARM loans since they can be risky.