What are FHA Mortgages?
FHA mortgage loans are very competitive loan programs. FHA mortgages allow downpayments as low as 3.5% AND less than perfect credit for homebuyers. Because the Federal Housing Authority insures your mortgage, Waterstone Mortgage may be more willing to give you loan terms that makes it easier for you to qualify. Other benefits of the FHA mortgage loan program may include:
- Lower mortgage insurance costs means lower payments
- Down payment can be gifted to the homebuyer
- Available on 1-4 unit properties
- Cash reserves not required in most cases
- Closing costs can be paid by seller
- Flexible qualifying debt to income ratios
- Streamline refinance available
FHA Mortgage loans can be fixed-rate or adjustable rate mortgages, but the majority are fixed-rate mortgages.
How is an FHA Mortgage Structured Compared to Other Mortgage Loans?
FHA Mortgage loans require a mortgage insurance premium to be collected at closing (upfront MI) and the annual premium is collected in monthly installments. The FHA mortgage insurance premium is not the same as your homeowner’s insurance and is required for all borrowers with less than a 20% down payment. A typical monthly mortgage payment on a FHA mortgage loan includes principal and interest, taxes, monthly insurance premium (MIP), homeowners insurance (assuming you have elected to make monthly payments on your taxes and homeowners insurance).
FHA Streamline Refinance
In order to refinance using the FHA Streamline Refinance program, your mortgage must already be FHA insured. The mortgage to be refinanced should be current (not delinquent). The refinance is to a lower the borrower’s monthly principal and interest payments. No cash may be taken out on mortgages refinanced using the streamline refinance process. Reduced premiums are available for borrowers that took out an FHA loan on or before May 31, 2009. Contact a mortgage loan professional near you to discuss FHA Streamline Refinance opportunities.
The U.S. Department of Housing and Urban Development (HUD) maintains a comprehensive FHA Resource Center. Visit the HUD/FHA Resource Center’s database of Frequently Asked Questions.
An FHA loan is a government-insured loan subject to certain qualifications and restrictions. FHA provides mortgage insurance on loans made by approved lenders. The cost of mortgage insurance is paid by the homeowner as an up-front amount that is usually financed into the loan amount, as well as an additional amount that is included in the monthly mortgage payment. Subject to credit approval. For reverse mortgages, borrower eligibility requirements apply. Consult a tax advisor for questions about tax and government benefit implications. If you are a servicemember on active duty, prior to seeking a refinance of your existing loan, consult your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.
All loan requests are subject to credit approval as well as specific loan program requirements and guidelines.