Buying your first home is an exciting experience—but it’s one that can be daunting and come with many questions. FHA loans (Federal Housing Administration) are one of the most common and beneficial types of loans for first-time homeowners. These loans offer more favorable terms and conditions than many other loans out there, and have helped millions of Americans get the homes they deserve.
We get many questions from potential homebuyers about FHA loans, and we’d like to address some of the most common questions to help you understand your options, requirements, and to give you a clearer idea of what to expect when you come to us with any questions.
The Most Common Questions Asked
What are FHA loans?
An FHA loan is a Federal Housing Administration-insured mortgage that affords you the opportunity to make a down payment as low as 3.5% with a 580 FICO score. This affords those with lower credit scores or limited cash the opportunity to move into the home they deserve without the restrictions and specifications attached to other types of loans.
The loan insures mortgages from a variety of financial institutions, such as credit unions, banks, and others. It’s this insurance that gives FHA lenders the confidence to provide attractive terms; FHA loans protect lenders in the event someone defaults on their loan. Keep in mind that only FHA-approved lenders may issue this type of loan.
Which housing developments are covered?
FHA loans cover a wide variety of residencies, but do come with some limitations. It’s important to explore your housing options before applying for a loan, as you want to be certain that it will cover your ideal living space.
This loan covers buying or refinancing single-family units, two-, three-, or four-unit multifamily homes, condos, mobile units, and others. However, some specific types of FHA loans may cover construction or renovations costs on existing homes. We can guide you through your options, whether you’re looking to move into an existing structure or build your own.
Are there different types of FHA loans?
As we mentioned, these loans can cover a variety of living spaces. SImilarly, there are different types of loans to cover different needs. We can provide details of each when you reach out to us, but below are the most common types.
A basic home mortgage loan (203)b offers either a fixed or adjustable rate, and applies to many different types of housing units, offering you quite a bit of flexibility when compared to other types of more restrictive loans.
For those looking to build a home, a construction to permanent (CP) loan can be extremely valuable and flexible. This type of loan gets homeowners the funds they need to purchase the land (if needed) as well as the home’s construction.
Energy efficient mortgages (EEMs) give homeowners the financial assistance required to make energy-efficiency improvements when purchasing or refinancing a home. This option is available for both existing and new housing units.
Turn to Atlas Crown Mortgage for FHA Loan Guidance
We know that buying or building a new home can be daunting—but it doesn’t have to be. Atlas Crown Mortgage has helped many families get the funds they need to move into the homes they deserve. We do this through years of experience in a variety of lending situations, and are proud to provide you with the expert resources you need to make a confident decision.
Ready to take the first step towards moving into your new home? Reach out to us today.