Updated January 2018
FHA Loans: A Very Popular Program Among Today’s Homebuyers
The FHA loan program has been one of the most popular loan programs in recent years because of its broad appeal and flexible guidelines. In the early to mid 2000’s, many homebuyers opted for other loan programs. Then the subprime mortgage crisis happened and more people returned to financing their homes using FHA loans.
A mortgage originally (and primarily) designed to help first-time homebuyers get their home, FHA loans also cater to people with less-than-perfect credit. Nowadays, the FHA loan program has appealed to people in all types of circumstances.
FHA Loan Highlights in 2018
When you take out an FHA loan, you are in for these perks: (i) down payment lower than on conventional loans, (ii) lower mortgage insurance costs (sometimes) and generally more flexible underwriting guidelines. Disadvantages to look out for are (i) mortgage insurance (both upfront – called UFMIP- and annual collected every month – called MIP), (ii) lower loan limits, and (iii) not all lenders are approved to offer FHA loans.
2018 Highlights of FHA loans include:
- Down payments as low as 3.5%
- Down payment assistance allowed
- Rehab loans available (FHA 203k) for fixer-uppers
- Flexible underwriting guidelines
- Manufactured home loan options available
- FHA streamline program for easy FHA-to-FHA loan refinance when rates fall
FHA Loans and Down Payment Assistance Programs
Even with the FHA loan’s low minimum down payment requirement, many families still struggle to come up with 3.5% of the purchase price. According to FHA guidelines, certain down payment assistance programs are allowed – check with your loan officer on which programs are applicable to you. Down payment assistance programs have separate qualifying criteria based on area, income, and other eligibility requirements.
HUD, which promotes homeownership through FHA, offers some resources to those people who are interested in learning more about the process of buying a home. These resources include but are not limited to:
- Housing counseling agencies
- Predatory lending
- Assistance programs
- HUD homes for sale
- Homeownership vouchers
- Home repairs
- Avoid foreclosure
- Make your home more energy efficient
For more information about HUD, click here.
Getting the Best Deal
Getting the best FHA loan deal means shopping for loans. This involves speaking with loan officers who are knowledgeable about FHA loans and work at lending institutions who offer great rates, too. The best way for you to know which loan officer and lender are right for you is to get multiple quotes from FHA-approved lenders.
By getting a quote, you speak with a loan officer, provide the necessary information, and then receive a quote based on that information. Also consider getting pre-approved to know how much a lender is willing to lend you based on your income and credit. We have made it easy to shop and compare lenders with our lender matching service.