FHA Loans

If you have minor credit issues, your debt-to-income ratio is a bit high, you need income from a non-occupying parent or you have little to no money to put down, an FHA loan could be a great option.

Whether the house is move in ready or in need of repair, we can help streamline the application process for you to help you get the funding you need. The FHA, or the Federal Housing Administration is not a lending institution. It provides insurance to lenders who are willing to grant mortgages to a wider range of applicants, allowing them to become homeowners or refinance their existing mortgages.

What is Mortgage Insurance?

Mortgage insurance works much like any other type of insurance policy you may have. Considering the amount of money at stake, banks like to have some guarantee that if you are unable to continue making payments on your loan, they will recoup at least a portion of their losses. Most mortgage insurance companies have very strict guidelines for a lender to follow making it difficult for people with a less than stellar credit score to secure funding.

The FHA promotes home ownership by overlooking some flaws when they approve a mortgage. This gives the lender the peace of mind to go ahead with the application, knowing that the FHA is backing it. You will be required to make an initial payment towards your mortgage insurance of about 1.75% of the loan amount. In addition, there will be a monthly premium, MIP, on your mortgage statement each month. The amount of insurance you pay is directly related to how much of a down payment you make on the home. The more of your own money invested, the less the insurance premiums.

The funds collected from the insurance premiums are used by the FHA in the event that you are unable to continue with your loan payments. Having that kind of security behind you makes a lender more willing to work with you, despite possible flaws in your credit history.