What is an FHA Loan?

The housing market may seem daunting but not impossible with the help of FHA loans. FHA Loans are designed to make buying your first home just a tadddd bit easier 🏡➡️💰➡️👏 Here’s what you need to know:

*not financial advice, just education!*

What is an FHA Loan?

FHA stands for the Federal Housing Administration, a government agency under the U.S. Department of Housing and Urban Development (HUD) 👩🏼‍⚖️ The FHA doesn't lend money directly to homebuyers but provides insurance to lenders, offering more security in case of default.

What are the Benefits of an FHA Loan?

Lower Down Payment

One of the most significant advantages of an FHA loan is the lower down payment requirement. Traditional mortgages often demand a substantial upfront payment, usually around 20% of the home's purchase price 🤯 With an FHA loan, you may qualify for a down payment as low as 3.5% of the purchase price!

Competitive Interest Rates

FHA loans also feature competitive interest rates, which can save you money over the life of your mortgage. These rates are designed to make homeownership more affordable, further reducing the financial burden on buyers 🤑🙌🏼

How Can You Qualify for an FHA Loan?

Qualifying for an FHA loan involves meeting certain criteria:

💳 Credit score & downpayment

FHA Loans are a bit more forgiving than conventional loans—meaning you can have a credit score 580+ to put down 3.5%.

💰 Steady Income 

Lenders will want to see that you have a stable source of income and can afford the mortgage payments. Typically, your monthly housing expenses should not exceed a certain percentage of your income.

🫱🏻‍🫲🏼 Proof of Employment

You'll need to provide employment and income history, usually covering the last two years.

🏧 Debt-to-Income Ratio

Your debt-to-income ratio, which compares your monthly debt payments to your income, should be within an acceptable range.

🏠 Live in the Home

You have to live in the home & it has to meet the criteria outlined by the FHA (you can’t buy a total dump!)

🇺🇸 Residency Status

You have to be a legal resident or U.S. citizen to qualify

🏦 PMI:

FHA Loans often require upfront and annual mortgage insurance premiums.

Consider talking to an approved lender in your area to see if you qualify 👏 You got this!! 

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