At NHL Lending, we offer FHA home loans because our goal is to do everything we can to support current and new homeowners in their pursuit of homeownership financing.
A Federal Housing Administration (FHA Loan) is a loan that is insured by the federal housing administration. These loans are available in all states, meaning you have access FHA Loans in Fort Lauderdale
The FHA program is a government initiative to make home loans accessible to first time owners and individuals who would not have the ability to gain to that kind of credit otherwise.
These loans are more reachable because of the risk to the lender, should the borrower default, is reduced and covered by government insurance.
The FHA program was created to fill the following unserved market needs:
- Potential homeowners with medium to low credit.
- Low-income families looking to buy a home.
- Individuals with varying income levels.
- Individuals who want to buy a home but do not intend to live in it, say for rental purposes. However, stay tuned, as there has been some talk of changing this.
- To finance homes that need repairs before they can be habitable. Say you want to buy a property, repair it, then flip it.
FHA Loan Mortgage Rates
The average interest rate for a 30-year fixed rate mortgage loan currently stands at around 5%. A fixed rate mortgage loan has an interest rate that does not vary throughout the lifetime of the loan.
FHA Loan Limits
The FHA sets maximum loan limits depending on the state. The current loan floor is $294,515 with a ceiling of around $679,650.
FHA Mortgage Insurance
FHA loans require two different kinds of mortgage insurance premiums. One is a fixed one-time payment that can be paid up front or can be included in the mortgage amount. The other is a monthly payment included in your monthly loan repayment schedule
FHA Loan Requirements
- Applicants with a down payment of 3.5%, must have a minimum FICO credit score of 580.
- The borrower must have a steady employment history or have worked for the same employer for the past two years.
- The borrower must have a valid social security number and be legally able to sign a mortgage in their state of residence.
- An FHA-approved appraiser must appraise the property.
- The borrower’s monthly debt obligations must not exceed 43% of their gross income.
Benefits of FHA Loans
- The amount of down payment required is low.
- The credit score requirements are not very strict.
- The loan can be transferred to the new owner of your home if you intend to sell.
Accessing an FHA Loan with Low Credit
Below we will describe some issues that would affect your credit score and how they influence your access to FHA loans.
If you have ever had a bankruptcy, it may seem that you will never have access to a mortgage loan, but this is not true. You can still access an FHA loan provided that at least two years have elapsed since you were discharged from the bankruptcy.
You will also need to demonstrate good credit history after the discharge. You cannot qualify for an FHA loan while still under bankruptcy.
If you have recently lost your primary source of income but still show responsibility in handling your debt obligations, you can still apply for and successfully obtain an FHA loan.
A previous foreclosure does not shut you out of the mortgage market permanently. Apply for an FHA mortgage loan 2 to 3 years after a foreclosure.
Federal Student Loans
Failure to make payments on your federal student loans greatly increases the chances that your loan application will be disqualified. If you want to apply for a mortgage, it is best to not be delinquent on those loans.
Federal tax liens will make you ineligible for FHA mortgage loans.
From this article, we hope that it is evident that a low credit score does not deny you the opportunity to access an FHA loan. Eligibility is largely down to the relationship you have with your lender.