FHA LOANS

Low Down Payments.  Easier Qualification.  Competitive Rates. 

AN FHA LOAN CAN TURN YOUR DREAM OF OWNING A HOME INTO A REALITY

Don’t let a big down payment keep you from purchasing your dream home

FHA LOAN BENEFITS

  • FHA Loans offer minimum down payments of just 3.5% (dependent on credit score)

  • FHA rates are comparable to conventional rates and can be assumed by subsequent buyers

  • Many FHA lenders accept lower credit scores and have more lenient underwriting standards

  • You may use gift funds from a direct family member for your entire down payment

  • Usually a faster, smoother process with a lower monthly payment

FHA LOAN BASICS

WHAT IS AN FHA MORTGAGE?

  • FHA loans bring home ownership into reach for buyers who may have a difficult time being approved for a conventional loan.  

  • An FHA loan is backed by the Federal Housing Administration (FHA).  Private lenders like banks and credit unions issue the loans and the FHA provides the backing.  This guarantee of repayment allows lenders to make substantial loans in situations where they would typically be unlikely to approve loan applications.

WHAT CAN A FHA MORTGAGE BE USED FOR?

  • An FHA loan can be used for single family homes, condos, multi-unit properties, and manufactured homes.

  • FHA 203k loans called can be used to pay for renovation/home improvements.

  • FHA limits the amount you can borrow to modest loan amounts relative to home prices in your area. Contact Simplicity Mortgage to determine the loan amount you are eligible for.

HOW DO I QUALIFY FOR A FHA MORTGAGE?

  • There are no minimum income requirement for FHA loans. You simply need to demonstrate you have enough income to pay the loan. To qualify for an FHA loan you need a debt-to-income ratio of at least 55%.

  • FHA has the ability to fund borrowers with lower credit scores than other loan options. If you want to make a 3.5% down payment, your score could be as low as 580. If you can make a larger down payment, your score could be lower still (10% down allows for scores between 500 and 580). 

  • Simplicity Mortgage has the ability to offer FHA loans without any additional overlays that other lenders may require

WHY DO I WANT A FHA MORTGAGE?

  • FHA loans were created to make home ownership accessible to people of all income levels. Some of the potential benefits of an FHA loan are:

    • Down payments as small as 3.5%

    • Bankruptcy & credit relief: FHA loans make it a little easier to get approved.  Bankruptcy, foreclosure, and derogatory credit have shorter seasoning periods.  You can be approved with thin credit, problems in your credit history or two or three years after a bankruptcy. 

    • Easier to utilize gifted funds or seller help for closing costs and down payments.  Fund your down payment with gift money from family, an employer, a charitable organization, and other interested parties

    • Provide some borrower protections and benefits for future buyers.  

    • FHA does not have prepayment penalties. Some mortgages have a prepayment penalty on their sub-prime loans - essentially they charge you if you pay off the loan before the loans term. 

    • FHA loans are assumable. A buyer can “take over” your FHA loan. They pick up where you left off, benefitting from lower interest (see the amortization table for how this works out).

ARE THERE ANY DOWNSIDES TO CONSIDER?

  • With all the benefits offered by the FHA loans, there is one key cost to be aware of - private mortgage insurance (PMI).

    • FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% (example: $2625 upfront cost on a $150,000 home), and a monthly mortgage insurance charge that can range from 0.45% to 1.05% annually (or $55 to $131 per month for $150,000 home).

    • Unlike conventional loans, this insurance cannot be cancelled throughout the life of the loan, you would need to sell or refinance to remove the PMI portion of your monthly payment.

  • A potential issue that a buyer could run into with FHA is buying power.

    • An FHA loan may not provide enough of a loan limit to get the home of your dreams, especially if you are looking for an expensive property or in a hot market.

TO CONTACT OUR TEAM,

CALL, TEXT, OR EMAIL:

SIMPLICITY MORTGAGE

386.401.9000

INFO@SIMMORTGAGE.COM

COMPANY NMLS # 1755062

411 DUNLAWTON AVENUE

PORT ORANGE, FL 32127

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