Michigan FHA Loans
What is an FHA Loan?
An FHA loan is a type of government-backed mortgage loan. You may qualify for an FHA loan if you have debt or a lower credit score. You might even be able to get an FHA loan with a bankruptcy or other financial issue on your record. Don’t worry too much about your credit.
If you are self-employed, a first-time buyer, or a borrower with non-traditional credit, an FHA loan may be perfect for you. FHA loans have no income limits, no geographic restrictions, and have liberal qualification requirements. Typically FHA also offers a lower down payment.
Michigan FHA Loan Requirements & Eligibility
FHA loans in Michigan have lower down payment requirements for borrowers, making them an appealing choice for many home purchases.
Michigan FHA Requirements:
- Lower credit scores allowed
- Down payment can be a gift from acceptable sources
- 5% minimum down payment plus closing costs and prepaid fees
- PMI (Private Mortgage Insurance) is required on all loans no matter the down payment amount
- Allows seller contributions towards buyer closing costs and prepaids
- 2022 FHA Loan limits:
- 1 Unit= $420,680
- 2 Units= $538,650
- 3 Units= $651,050
- 4 Units= $809,150
- The home must be the borrower’s primary residence
- The borrower must have a steady income and proof of employment
What Can Disqualify Me From An FHA Loan?
It is possible to purchase a mixed-use property using an FHA home loan and its low down payment requirements, but if the home is not primarily used as a residence and has 50%, or more floor space taken up by non-residential use, it cannot qualify for an FHA mortgage.
- Properties used as an investment or secondary purchase
- Homes that are a majority non-residential.
- A home value above an limits
Michigan FHA Mortgage Rates
FHA mortgage rates fluctuate daily based on several financial indicators and trends, just like gas prices.
To get an up-to-date quote on real-time mortgage rates, tap the button below to get in touch!
How do FHA Loans work?
FHA Loans are home loans that are issued by lenders but backed by the Federal Housing Administration. The FHA does not lend money themselves, but rather approves loans originated by independent lenders, like Treadstone.
FHA is managed by the Department of Housing and Urban Development (HUD). HUD sets the eligibility requirements and loan amount limits based on valuation trends and market health.
As with all loans, FHA loans in Michigan are dependent on appraisals, inspections, and other property requirements. Every loan is different; contact a Loan Officer of your choice for more information!
Benefits of FHA Loans
FHA Loans were created during the Great Depression for one purpose— to allow more people to become homeowners!
Down payments may be as low as 3.5% for qualified borrowers.
Shorter waiting periods & lower credit scores allowed
FHA loans also allow a shorter waiting period after poor credit or bankruptcies.
Even better, FHA loans even allow borrowers to purchase a home without a credit score. The Department of Housing and Urban Development prevents lenders from denying loan applications exclusively on lack of credit or credit history.
Also, there are no early-payoff penalties or fees!
Used for Many Types of Homes
Loans backed by the Federal Housing Administration may be used for single-family homes, condominiums (complex must be FHA approved), multiple-family homes (as long as the borrower resides in at least one unit), and manufactured homes.
Things to Consider for FHA Loans
FHA Mortgage Insurance Premiums
FHA loans require all borrowers to have FHA Mortgage Insurance Premiums (MIPs), also known as Private Mortgage Insurance (PMI). This is additional insurance for the origination of the loan, which protects lenders from default. These premiums also exist in other loan types—your loan officer can accurately weigh your options.
Mortgage Insurance Premiums for FHA Loans change depending on the loan term, amount, and loan-to-value ratio.
Homebuyers with an FHA loan are required to place a minimum of 3.5% down. For comparison, conventional loans require 3-5% down, while USDA loans & VA loans require 0% down. Each loan program contains unique qualification requirements— the down payment is only one piece of the puzzle.
Maximum Loan Amounts
The maximum loan amount for Michigan FHA loans in 2022 is $420,680 for single family homes/condominiums. Be sure your FHA loan financing remains below the limit!
If you have received, or plan to receive gift funds for a home down payment, FHA loans allow you to pay 100% of your down payment with gift funds. Gift funds can be sourced from your family, employer, an approved charity, or homebuyer program from the government.
How do I qualify for an FHA Loan?
There are many requirements for an FHA loan, but the general core requirements include:
- FICO score at least 580 = 3.5% down payment.
- PMI (Private Mortgage Insurance) is required.
- The home must be the borrower’s primary residence.
- You must have a steady income and proof of employment history.
What core requirements may disqualify me from an FHA Loan?
- Usage of FHA loan on investment or secondary homes
- Property is less than 50% residential
- Down payment less than 3.5%
- Loan value above $420,680
- Filed bankruptcy within 24 months
Can I refinance an FHA loan?
Absolutely! It is common for borrowers to refinance an FHA loan, either replacing it with a Conventional Loan or another FHA loan, in order to remove PMI (private mortgage insurance), cash-out their home’s equity, or change their loan’s terms. FHA also offers a Streamline refinance, which allows FHA borrowers to lower their mortgage rate without pulling credit or verifying income.
For more information on refinancing, visit our re-fi page!
How to get an FHA Loan in Michigan
To get an FHA loan contact one of our loan officers! They’ll walk you through each step of the process, and help you determine if an FHA loan is right for your home purchase.
Don’t worry! Our Loan Officers are pros.