What is a FHA Loan?
To protect lenders from faulty loans, the Federal Housing Administration (FHA) offers loans that are backed or insured. This backing enables prospective home buyers, who otherwise may not qualify, to get financing to buy a home.
What makes FHA Loans unique?
FHA loans are unique in that they offer opportunities to potential home buyers who have had previous financial difficulties, such as past due collections, bankruptcy, and foreclosures. This loan has the lowest credit score requirement and the highest debt-to-income ratio eligibility. Wondering if you qualify? Find out if this loan is a good fit for you by contacting our Mortgage Lending team today!
What is a debt-to-income ratio?
A debt-to-income ratio is calculated by dividing all your monthly debt payments by your gross monthly income. Lenders use this number to determine your ability to repay the money you plan to borrow on time. For a FHA Loan, borrows can have a higher debt-to-income ratio compared to a standard mortgage debt-to-income requirements.
What is Private Mortgage Insurance (PMI)?
Private mortgage insurance (PMI) is a form of mortgage insurance that may be required with certain types of loans. If you default on your loan, PMI protects your lender. In the case of a FHA Loan, a certain down payment is required to waive PMI. However, FHA insurance is often cheaper than traditional PMI.