Today’s home buyers don’t always have enough money saved for a traditional down payment.  For buyers with less than 20% down available the benefits of obtaining a mortgage loan through the Federal Housing Administration makes buying a home affordable. The FHA allows mortgage loans with as little as 3.5% down at today’s current mortgage rates.

Why Use FHA Mortgage?

According to HUD -FHA loans have been helping people become homeowners since 1934. How do they do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.  Which offers buyers: Lower Down Payments, Lower Closing Costs and Easier Credit Qualifying Guidelines.  FHA doesn’t actually lend the money-but provides insurance backing the loans so local lenders are comfortable handling loans.  And the FHA is currently the largest insurer of mortgages in the world.

FHA Loans Are Very Popular

Home buyers shop for mortgages often comparing interest rates, closing costs and the cost mortgage insurance known as PMI for conventional (Fannie and Freddie) backed loans and MIP for FHA backed loans.  It’s important to discuss with the best option with your lender so you don’t end up with a slightly lower interest rate and a higher mortgage insurance premium.   But for today’s buyers trying to move up or make their first purchase FHA backed loans comprise a significant number of loans in the greater Cincinnati real estate market.  The blend of more flexible lending guidelines, low interest rates and, most importantly, low down payment is hard to beat.

Some of the Benefits of FHA Loans                                                                                                                                                                 HomeSearch

3.5% Downpayment!  For home buyers, there are only a few mortgage options which allow for down payments of five percent or less and the FHA is available in our area.  For cash strapped buyers the lower down payment offers a change to have some money left for upgrades and decorating after you move in.

FHA Allows 100% Gift Funds

The FHA is generous when it comes to gifts for down payment. Very few loans programs will allow your entire down payment for a home to come from a gift but FHA does.  Using FHA your entire 3.5% down payment can be a gift from parents or another relative, an employer, an approved charitable group, or a government homebuyer program. If you’re using a downpayment gift, though, you’ll need to follow the process.

A FHA Product For Every Need

There are lots of FHA Loan “products”.  The traditional 30 year fixed rate as well as 15 year fixed rate.  Fixer-upper rehab purchase loans known as 203K.  And FHA also has a product if you are looking to refinance your current loan.

Buyers looking for a way to purchase need to investigate the benefits of a FHA loan- especially while interest rates remain low.