Since its creation in 1934, The U.S. Federal Housing Administration (FHA) has insured over 47.5 million mortgages, enabling mortgage lenders to offer loans to individuals who may not have qualified for financing otherwise.
The FHA loan is backed by the government but it’s not from the government, so choosing a lender with expertise in FHA loans is important. We’ll go over some key benefits in this article, but don’t forget that you can always call Mid America Mortgage at 573-875-1100 if you’re contemplating an FHA loan.
Lower Down Payment
A down payment of only 3.5% is required at closing for FHA loans if the FICO credit score is 580 or higher. When you contrast this with a conventional mortgage down payment—which is usually between 5-20%— FHA loans are especially appealing for borrowers who may not have substantial cash reserves.
Lower Credit Score
It can be difficult to get conventional financing when your FICO credit score hovers at or below 620, but FHA loans have different guidelines; applicants may be able to qualify with a credit score as low as 580. However, you don’t have to have lower scores to take advantage of an FHA loan; many borrowers with excellent credit find advantages in pursuing FHA financing.
There is no minimum (or maximum) income requirement for an FHA loan. You must be able to substantiate your earnings, but a Mid America Mortgage loan officer can help walk you through the necessary documentation.
Gift Funds for Down Payment OK
FHA financing allows for gift funds to be used for the down payment and closing costs—a nice feature that conventional loans typically exclude.
There are many other benefits and requirements for an FHA loan. Please contact us to find out if an FHA loan can help you with your purchase or refinance. When you work with Mid America Mortgage, you stand firm on our long history of excellence in residential mortgages and our commitment to competitive rates and outstanding service. We’ve been serving generations of homebuyers since 1984. Let us guide you every step of the way!