A recurring theme in our blogs is the fact that there are different types of mortgages. The two main types of loans that people think about are: conventional loans and government loans. Today we will be talking about one type of government loan that is especially popular among first time home buyers: FHA Loans.
FHA stands for Federal Housing Administration. FHA does not actually issue mortgages themselves, but rather they insure their mortgage products which protects lenders when loans default. Historically, many first time home buyers and others have loved FHA loans because the qualification requirements are often more flexible.
FHA & Interest Rates:
No matter which city, suburb, or town you buy in, FHA loans have interest rates that are usually competitive with most other loan types. As with any mortgage loan, your interest rate on an FHA loan is dependent on many factors, including but not limited to: credit, debt to income ratios, market conditions, and many more.
FHA Loan Down Payment Options:
FHA Loans are very popular because the minimum down payment is only 3.5%. Another convenient option with FHA loans is that 100% of your down payment can be a gift (from a family member or relative). Of course 3.5% is only a minimum and borrowers are free to put higher amounts down as well. This is a great option for buyers who find a home in a convenient neighborhood that “could” be their dream home if just a few things were updated or changed.
Qualifying For an FHA Loan
Whether you are a first time home buyer or know anyone else interested in an FHA loan, connect with a mortgage expert so we can help! Treadstone Funding is your local mortgage company in Grand Rapids, MI.
Another convenient option with FHA loans is that 100% of your down payment can be a gift!