What Is An FHA Loan?

An FHA Loan is a residential mortgage loan that is insured by the Federal Government through the Federal Housing Administration of FHA. This agency is a division of the Department of Housing and Urban Development (HUD) and it is HUD that sets all of the rules and requirements for the FHA mortgage program.

HUD requires that all FHA borrowers pay for mortgage insurance regardless of the size of your down payment. This insurance protects the lender in the event of a default by the borrower. There are two types of mortgage insurance when using an FHA mortgage, upfront MIP (Mortgage Insurance Premium) and monthly MIP. Upfront MIP is financed into the loan amount and monthly MIP is paid every month as part of the principal interest, taxes and insurance (PITI) monthly payment.

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What are some basic benefits of an FHA loan?

  • Lower Down Payments
  • Lower Closing Costs
  • Easier Credit Qualifying

Are you looking to buy your first home?

If you are looking to purchase your first home, there are lots of things that might be holding you back from pulling the trigger on the place of your dreams. Mortgage loans shouldn’t be the ultimate factor in whether or not you make the decision. With an FHA loan through Commonfund Mortgage your down payment can be as low as 3.5% of the purchase price according to HUD regulations. This makes starting the next step in your life something you can forward to instead of dreading!

Is your credit score less than perfect?

With a credit score that is between 550 and 579 you can still get approved for an FHA loan, the stipulation being a down payment of 10 percent or more (often less than a typical homeowners’ loan.) A credit score of 580 or higher qualifies borrowers for a down payment as low as 3.5 percent.


Benefits Of Applying For An FHA Mortgage At Commonfund Mortgage

  • Low down payments of 3.5% may be paid in the form of a gift from a family member.
  • Accepts low credit  scores, as low as 580. But, it is important to remember that the lower the credit score the higher the interest rate will be to the borrower.
  • If you do not have a credit score you can still apply with 3 verifiable alternative credit references.
  • FHA mortgage is assumable, which means when you sell your house the buyer can assume the mortgage loan you have at your interest rate. This new borrower must credit qualifying for the current loan.
  • FHA loans are not limited to first time buyers but you must owner-occupy the home
  • In general FHA loans have more lenient debt-to income ratio thresholds than conventional mortgages.
  • Singlewide manufactured homes (minimum loan amount of 75,000.00) and doublewide manufactured homes are FHA financeable
  • Employment contracts are acceptable as proof of income as long as you have a paystub within 60 days of closing.
  • Unlike most mortgage programs, with FHA loans there is no prepayment penalty. This is a great value for subprime borrowers.

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