FHA Home Loans

Did you know there's more than one kind of home loan? Okay, maybe you did, but do you know which one is right for you? The first is a fixed-rate mortgage. This means that your principle and interest payments stay the same for the life of the loan so you won't have to worry about payment increases.

FHA Home Loans – Opening Doors for Many Homeowners

The FHA was created in the 1930s to make home ownership more affordable. The FHA doesn't actually loan the money; it simply underwrites, or insures, loans so lenders feel more comfortable lending out money to borrowers they might otherwise consider to “risky” to qualify for loans. In addition to underwriting mortgages for purchasing a home, the FHA also provides refinancing loans with the same relaxed requirements. 

First Time Homebuyers, Limited Income or Money for a down Payment?

Ready to buy your first home? Working with limited income or money for a down payment? A government-insured Federal Housing Administration (FHA) home loan could the right solution for you. FHA loans have been helping people buy homes, whether the first or the fourth, since 1934.

What are the Benefits of an FHA Loan?

FHA home loan programs typically help first-time homebuyers, seniors or others with limits on what they can afford. FHA home loans offer:

  • A low 3.5% down payment
  • Flexible income and credit requirements
  • Low closing costs

Are There Limits to an FHA Loan?

Some FHA home loans have a loan value cap based on location, but keep in mind that the typical FHA candidate already has financial limits. That makes this less of an issue. The program has no minimum credit score, although the lender might, and the chances of approval get better as the scores get higher.

FHA Fixed Rate Home Loans

There are two types of fixed FHA mortgage rates (offer the same rate throughout the life of the loan):

  • 30-year fixed rate FHA
  • 15-year fixed rate FHA

Both options offer the same interest rate stability, but the 15-year term has higher monthly payments, giving you a faster way to build up home equity. You can use this higher equity as a down payment when you move to your next house.

FHA Adjustable-Rate Mortgages

An FHA adjustable rate mortgage (ARM) lets homeowners pay a low introductory interest rate for the first few years, then move to a new home before it adjusts, possibly upwards. If you know this is a starter home that you will leave in a few short years, then an ARM could make sense for you. PrimeLending offers the 5-year hybrid ARM (fixed for the first 5 years, change annually after that, annual cap of 2 percentage point and a lifetime cap of 6 percentage points.)

Tap into Your Home's Equity with an FHA Cash-Out Refinance Loan

If you've been in your home for some time or you've made some upgrades – or both, chances are your home may be worth more than what you owe on your mortgage. The difference between your home's value and what you owe on it is your available equity, and when you choose a cash-out refinance, you can gain access to that extra equity.

Refinancing with a loan backed by the Federal Housing Administration (FHA) could make it easier for you to qualify, especially if you have less-than-ideal credit, variable income or a higher debt-to-income ratio. That's because FHA loans tend to have more relaxed lending guidelines.

What are FHA loans?

The FHA was created in the 1930s to make home ownership more affordable. The FHA doesn't actually loan the money; it simply underwrites, or insures, loans so lenders feel more comfortable lending out money to borrowers they might otherwise consider to “risky” to qualify for loans. In addition to underwriting mortgages for purchasing a home, the FHA also provides refinancing loans with the same relaxed requirements. Plus, while most lenders prefer to write loans no higher than 80 percent of the home's value, the FHA allows loans of up to 85 percent of the value, so you can gain access to more of your equity.

Why choose an FHA cash-out refinance?

There are lots of reasons to tap into your home's equity, including:

  • To pay for college or other education for themselves, a child or grandchild
  • To pay for other major expenses like a wedding or a dream vacation or family reunion
  • To make upgrades to the home, like a pool, new deck or addition, that will make living in the home more enjoyable and potentially raise the home's value
  • To make improvements like walk-in-showers that will enable older homeowners to "age in place"
  • To fund a nest egg or other investments
  • To consolidate higher-interest debts like credit cards, personal loans or car loans

Cash-out refinance mortgages can provide you with the financial flexibility you've been looking for, and if you can lock in one of today's lower rates, the deal can be even sweeter. If you're considering a cash-out refi, this may be the perfect time to lock in your rate. And at PrimeLending, we're ready to help ensure your FHA cash-out refinance process goes as smoothly as possible.