FHA loans are issued by federally qualified lenders and backed by the Federal Housing Administration. These types of loans are typically designed for low-to-moderate income borrowers who are unable to make a large down payment. FHA loans are typically more flexible in credit and income requirements than conventional loans.
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FHA Loan Benefits
- Credit score requirements are lower compared to other loans.
- You could potentially qualify for an FHA loan if you have had financial issues in the past.
- They’re available with fixed or adjustable rates and for 30- or 15-year terms.
- They have low down payment requirements. You can put down as little as 3.5%.
- You may potentially refinance an FHA loan with less documentation and you may not need an appraisal.
- FHA allows 100% gift for down payment.
Cons of an FHA Loan
- Normally you will have to pay an upfront mortgage insurance premium (MIP) as well as monthly MIP, which is included in your mortgage payment.
- The FHA loans are not available for second homes and investment properties.
- The FHA loan limits are generally less than conventional loans in most counties.
When it comes to credit, more information generally means more consumer empowerment. That’s why we’re excited to introduce a new education video series from FICO called Understanding Your Credit.
Credit can be confusing and complex. We’ve created these four initial short videos to help you better understand FICO® Score basics.
Credit reports are the foundation of FICO® Scores, but what are they exactly? Watch this video to find out which information on credit reports does and doesn’t impact FICO® Scores.
Every day, thousands of U.S. lenders use FICO® Scores to make more well-informed, credit-granting decisions. What does that mean? Why is it important to understand how lenders use them? This video takes a look at what a FICO® Score is and why it matters to consumers and lenders alike. Watch it to learn how FICO® Scores streamline the lending process, making it faster and fairer.
Whether applying for a credit card, mortgage, or auto loan, there’s a good chance the lender is using FICO® Scores to help make their approval decision. The good news is, FICO® Scores are ultimately in the individual’s hands — they’re based on credit habits and behaviors. That’s why understanding what goes into FICO® Scores is a vital part of credit health. Watch this video to learn the five key categories that factor into FICO® Scores.