What Is An FHA Mortgage Loan?
In today’s blog post, we’re answering some frequently asked questions we receive about FHA mortgage loans. There are a wide range of mortgage options available, and an FHA loan can be a great choice for first-time homebuyers or buyers with less than ideal credit scores. Continue reading to learn more, visit our FHA mortgage page, and if you’d like more information about your mortgage options, contact Patriot Home Mortgage in St. George or Mesquite. Our mortgage company serves all of the Western United States, from Colorado to California, and we’d be more than happy to talk with you!
How does an FHA loan work?
An FHA is a type of mortgage that’s insured by the Federal Housing Administration, or FHA. They’re a great home loan option for first-time homebuyers because they allow for a lower down payment and lower credit scores. However, borrowers who choose to use an FHA mortgage must pay mortgage insurance premiums, which protects the lender if the borrower is unable to pay their mortgage and defaults on the loan.
Who can qualify for an FHA loan?
To be eligible for an FHA loan, borrowers must meet certain lending guidelines: FICO score of 500 to 579 with 10% down or a FICO score of 580 or higher with 3.5% down.
What is the downside of an FHA loan?
An FHA mortgage will mean higher total mortgage insurance costs because buyers pay a monthly FHA mortgage insurance premium as well as an upfront mortgage insurance premium, regardless of the down payment. This adds to your upfront costs as well as your monthly costs throughout the life of your home loan.
Which is better, FHA or conventional mortgage?
It depends on your situation! FHA loans allow for lower credit scores and are easier to qualify for. They’re also insured by the FHA, which conventional mortgages aren’t. FHA loans have a minimum down payment of 3.5% for borrowers with credit scores of 580 or higher, and while some conventional mortgages allow a 3% minimum down payment, it’s reserved for borrowers with higher credit scores. And as with any mortgage, your debt-to-income ratio will also be taken into account when qualifying for a home loan. If you’re wondering whether you should get an FHA loan or a conventional mortgage, it’s best to schedule a consultation with a mortgage consultant to discuss your personal situation.
Are closing costs higher on an FHA loan?
Closing costs for FHA loans are about the same as they are for a conventional home loan. However, the FHA appraisal is a little more complicated and can cost around $50 more than the appraisal for a conventional mortgage. The FHA loan also requires an upfront mortgage insurance premium, which will add to the total that you’ll need to pay at the closing.
Can a seller refuse an FHA loan?
There’s no law that requires a seller to accept FHA mortgage finances, and a seller will limit their pool of potential buyers if they choose to do so.
Need Personalized Mortgage Help? Contact Patriot Home Mortgage
Think an FHA mortgage loan might be right for you? Have more questions? Want to talk with a mortgage expert? The team at Patriot Home Mortgage is here for you! We’d be more than happy to talk with you about your mortgage financing options and help you create a home buying budget. Contact us in St. George, Utah or Mesquite, Nevada today. Along with FHA mortgage loans, we also provide services for conventional mortgages, VA loans, USDA loans, jumbo loans, reverse mortgages, and more.