What Is An FHA Loan?
Your Credit Profile Excellent 720+ Good 660-719 Avg. 620-659 Below Avg. 580-619 Poor ≤ 579.
When do you intend to buy your house? Found a house; signed a purchase agreement; offer pending; will you buy in 30 days, 2 to 3 months, 4 to 5 months, or 6 months from now?
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How Do FHA Loans Work?
- Listed rates are offered exclusively through Rocket Mortgage.
- Mortgage rates could change daily.
- The actual amount paid will differ depending on your unique circumstances and the going rates.
- Some products may not be available in all states.
- First-time homebuyers might not be able to purchase some jumbo products.
- Lending services may not be available in all areas.
- Some restrictions may apply.
- based on the acquisition or refinancing of a primary residence with no closing-day cash out
- Unless otherwise noted, we assumed that: closing costs are paid out of pocket; this is your primary residence and a single-family home; the debt-to-income ratio is less than 3%; and the credit score is above 720; or, in the case of specific Jumbo products, we assume a credit score above 20740; and an escrow account for the payment of taxes and insurance.
- The lock period for your rate is 45 days.
- PMI will be added to your monthly mortgage payment if LTV is 20% or less than 80%, except for military and VA loans. Military/VA loans do not require PMI.
- Please remember that we don’t have all your information. As a result, the rate and payment figures this calculator displays might not accurately represent your circumstances. Rocket Mortgage offers a wide variety of loan options. If your situation differs from what we assumed, you might still be eligible for a loan. For more precise and customized outcomes, give us a call to speak with one of our mortgage specialists.
Types Of FHA Home Loans
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FHA Vs. Conventional Loans
|
Conventional Mortgage Loan |
FHA Loan |
|
|
Minimum Down Payment |
3% |
3.5% |
|
Loan Terms |
Loan terms range 8 – 30 years |
Less options than conventional, but several between 15 – 30 years |
|
Minimum Credit Score To Qualify |
620 |
500 with a 10% down payment; 580 and above with only a 3.5% down payment |
|
Loan Limits |
$726,200 in most areas; up to $1,089,300 in high-cost areas for a single unit |
$420,680 to $970,800 depending on home location |
|
Mortgage Insurance |
PMI if down payment is less than 20%; no PMI if down payment is at least 20%. |
MIP upfront and monthly insurance throughout the life of the loan (or 11 years with a 10% or more down payment) |
|
Relative Interest Rate |
Rates are comparable depending on qualifications |
Rates are comparable depending on qualifications |
|
Interest Structure |
May be fixed or variable |
Fixed or adjustable rate |
|
Who Backs The Loan? |
Fannie Mae or Freddie Mac usually buy and guarantee the loan |
Backed by the Federal Housing Administration |
Is An FHA Loan Right For You?
To receive professional advice with actual interest rates and payments, apply online.
Victoria Araj has worked for Rocket Mortgage for 15 years as a section editor. During that time, she has also held positions in mortgage banking, public relations, and other areas. She graduated from Michigan State University with a bachelor’s degree in journalism with a political science focus and the University of Michigan with a master’s degree in public administration.
FAQ
What is an FHA loan and how does it work?
A form of mortgage known as an FHA loan is intended for applicants who do not meet the requirements of a conventional loan or who have credit scores that are too low. You will have to pay mortgage insurance premiums in addition to your mortgage payments if you obtain an FHA loan.
What is the downside to a FHA loan?
Cons of FHA Loans: An additional expense, a two-year upfront mortgage insurance premium (MIP), is one of the drawbacks of FHA home loans. 25% of the loan’s value. When you obtain the loan, you must either pay the MIP in cash or over the course of the loan. Home price qualifying maximums are set by FHA.
Is it a good idea to get a FHA loan?
First-time homebuyers or those with less than ideal credit histories are frequently advised to apply for FHA loans because they are frequently easier to qualify for, have more affordable mortgage rates, and require less cash up front to purchase a property.
Why would someone use an FHA loan?
For those who the banks would likely otherwise turn away, the FHA loan offers a route to homeownership. They might not have much money for a down payment or have a bad credit score. Without that government guarantee that the bank will get its money back, they might not be eligible.
Read More :
https://www.hud.gov/buying/loans
https://www.rocketmortgage.com/learn/fha-loans