FHA Loans

FHA mortgage loans are mortgage products insured by the Federal Housing Administration (FHA), a program of the U.S. Department of Housing and Urban Development (HUD). Compared to other mortgage loan types, they typically impose less stringent credit and income requirements. They are designed for low- and moderate-income families and permit a down payment as low as 3.5 percent.

Qualifying for an FHA Mortgage Loan

The qualifications for an FHA mortgage loan tend to be less stringent than many other loan options – especially when compared to conventional loans. A minimum down payment of 3.5 percent is permitted, and credit scores as low as 580 are accepted. FHA loans also permit higher debt-to-income ratios, which expands the qualifying opportunities for borrowers, subject to lender approval.

Advantages of FHA Loans

• Low down payment requirements
• Competitive interest rates
• Higher debt-to-income ratios
• Lower minimum credit score requirements
• Ideal for first-time homebuyers
• Down payment can be obtained from a gift
  • Flexible down payment options such as grants, gifts, and down payment assistance are allowed
•  Seller can pay up to 6 percent toward closing costs

Disadvantages of FHA Loans

• Maximum loan amounts subject to FHA county limits
• Requires mortgage insurance, both up front and monthly

Is an FHA Loan Right for You?

FHA loans can be a great option for many homebuyers, particularly those who need lower up-front costs, require more flexible credit underwriting, or have little saved for a down payment.

An FHA loan might be right for your home purchase if:

• You need a lower down payment
• You will be using a gift for your down payment
• You have less than perfect credit
• You have a high debt-to-income ratio
• You are a first-time buyer

Can’t decide if an FHA loan is the right mortgage for you? Park Cities Mortgage can provide you the information to make an informed decision. We also offer numerous other loan options, including conventional, USDA, VA, and more for comparison. Check out our loan options page to learn more about various options. For more customized loan guidance and recommendations, contact a Park Cities Mortgage loan officer today. Our hands-on, personalized approach is a service that you can expect from one of the most respected mortgage companies in North Texas.