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FHA Loan

FHA LoanAn FHA loan allows you to buy a house with less than a conventional home loan. That’s the bottom line.

With as little as 3 percent of the purchase price used as a down payment, as opposed to the higher percentages often mandated by lenders to secure conventional mortgages, you can own your piece of the American Dream.

Taking advantage of an FHA loan program is a great way for buyers - first-time buyers or those in some of the nation’s hottest markets in particular - to get their feet in the door and get on the road to building a brighter financial future. In order to buy a home, the biggest investment you will ever make, you need a home loan. This makes it easier.

The FHA (Federal Housing Administration) does not make the home loan you apply for. It insures it. If a buyer defaults, the home loan lender gets paid from the insurance the FHA agrees to provide. Henceforth, before you are approved for an FHA home loan, you will need to provide proof of your good credit history and sufficient income.

It will be hard to find a bad credit home loan issued and insured by the FHA. Loan originators elsewhere are running into problems with subprime products, so you can count on credit scores and income verification playing a stronger role when you go this route. This is a program designed to help people who have limited cash reserves to make down payments - not to issue high-risk mortgages.

For an FHA loan, your monthly housing costs should not exceed 29 percent of your gross monthly income. Total housing costs include the total amount of the home loan (principal and interest), plus property taxes and insurance.

The debt-to-income ratio for an FHA loan is more lenient than for a typical home loan. For conventional home loans, the expenses listed above usually can’t exceed 25-28 percent of your monthly income. Similarly, all your debt (including your FHA loan and other obligations) is allowed to comprise 41 percent of your income when you go this route.

To talk to one of our brokers about an FHA loan, fill out the easy and no-obligation application atop this page. We will consult with you honestly and helpfully, with no commitment on your part. Let our FHA loan experts see what we can do to help you as you embark on this quest.