FHA Mortgage Program

The FHA loan, insured by the Federal Housing Administration, operates under the U.S. Department of Housing and Urban Development (HUD). Unlike directly lending money to borrowers, the FHA safeguards lenders by offering mortgage insurance, protecting them in case the borrower fails to meet loan obligations. Geared towards creditworthy individuals and families with low to moderate incomes who may not qualify for conventional loans, the FHA loan programs are accessible to all buyers.

8 Reasons a Borrower Should Choose an FHA Mortgage:

Established through the National Housing Act of 1934, the Federal Housing Administration (FHA) is a government agency in the United States. Its primary objective is to broaden the scope of homeownership, catering to borrowers who might not qualify for conventional conforming loans. Remarkably, almost 1 in 5 home buyers opt for an FHA loan to secure their homes. While renowned for its traditional 30-year fixed-rate mortgage, the FHA provides additional options, including a 15-year fixed-rate loan and a variety of adjustable-rate mortgages.

FHA generally has lower overall down payment requirements, typical down payments are as low as 3.5%, and gift funds can be used for the entire down payment.

FHA allows lower FICO score requirements than conventional financing.

FHA allows for higher debt to income ratios to qualify. That can be great for first time home buyers who may not have significant incomes but can dedicate a greater portion of their income toward home-ownership.

FHA allows for a shorter time frame following major negative credit events, such as foreclosure or bankruptcy than conventional lending.

FHA mortgages are assumable and in a rising interest rate environment can position the buyer to have an advantage when selling their home later. Most conventional fixed rate mortgages are not assumable.

FHA allows seller concessions up to 6% of the purchase price even with only 3.5% down payment, while conventional loans would only allow 3% seller concessions on down payments of 10% or less.

FHA mortgage insurance is much more affordable than conventional private mortgage insurance for borrowers with less than excellent credit scores.

FHA interest rates are generally lower than mortgage rates on conventional loan given the same credit scores.


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John Higgins

NMLS #136061


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