| Have you heard the term FHA mortgage? Ever | | | | FHA will lend to less than perfect credit and is more |
| wonder what makes this financing different than | | | | understanding if you have had financial difficulties in the |
| Conventional? Good, this is your opportunity to learn a | | | | past. Under FHA you can even obtain financing 2 to 3 |
| few important loan advantages, but let's first begin with | | | | years after a claimed bankruptcy or foreclosure if you |
| the definition of FHA. | | | | have had no late payments in the last 12 months and |
| FHA stands for Federal Housing Administration and is | | | | have made an effort to rebuild and establish new |
| the largest government insurer of mortgages in the | | | | credit. |
| world. They are a part of the United States | | | | Competitive rates and terms |
| Department of Housing and Urban Development | | | | FHA often has the same rate/terms as a |
| (HUD), and they provide mortgage insurance on | | | | Conventional loan. The rate differences varying as little |
| residential homes. FHA was established in 1934 to | | | | as.125% on a Conventional loan. |
| expand homeownership. The idea was to have more | | | | While there are many benefits to an FHA mortgage |
| lenient financing guidelines to increase the number of | | | | there are a few drawbacks as well. FHA sets |
| buyers who could qualify for mortgages. | | | | geographical loan limits based on the area and the |
| Below are some FHA loan advantages: | | | | median housing costs in your City as the program is |
| Lower down payment requirements | | | | designed to help low to moderate income families |
| FHA only requires a 3.5% down payment and this | | | | afford the opportunity for homeownership. Depending |
| money can be received as a gift from a family | | | | on the sales price of the home you may need to apply |
| member or relative. Conventional financing requires a | | | | for Conventional or Jumbo financing. Also, keep in mind |
| 5% down payment and the funds must come from | | | | FHA mortgages only apply to your primary residence |
| the buyers assets. | | | | so you must occupy the property to maintain FHA |
| Higher allowable closing cost credits | | | | financing. |
| FHA will allow a buyer to receive up to 6% sellers | | | | Now that you know a few of the key differences |
| assist toward their closing costs no restriction on the | | | | between FHA and conventional financing you can use |
| down payment. Conventional financing requires a 10% | | | | this information to help you decide which financing |
| down payment to receive a 6% seller's assist. | | | | option works best for you. |
| Allows for a blemished credit history | | | | |