Oakland Park FHA Loans2018-12-08T14:00:43+00:00

Benefits of Oakland Park FHA Loans

There are different kinds of home loans that you can take to purchase your new home. So what is so special about FHA Loans? What are they? In addition, why should you consider NHL Lending’s Oakland Park FHA loans above others?

This article will break down the lingo for you and help you understand why you would need to take an Oakland Park FHA loan.

Defining an FHA Loan

Benefits of Oakland Park FHA Loans

An FHA loan refers to a home loan that is insured by the Federal Housing Administration. There is a misconception about who qualifies for an FHA loan. In fact, most people think that the acronym stands for a first time home buyer and that only first-time home buyers qualify. However, this is not necessarily true.

It is true though that FHA loans are very popular amongst first-time homeowners. What makes them so popular is that even with a credit score of 580, you can still qualify for a 3.5% down payment. This, of course, makes it risky for the lender.

To assuage those fears, the borrower has to pay mortgage insurance premiums that protect the lender against defaults.

FHA Loan Requirements

In order to qualify for an FHA loan, you need to have a FICO score above 580. Just in case your FICO score is less than that, you still qualify for the FHA loan, however, you will have to make a larger down payment of 10% instead of 3.5%.

Other borrower requirements include:

  • They need to have worked for the same employer for 2 years or show proof of steady employment.
  • They must have legal residency in the United States and be of legal age to sign a mortgage in Florida as well as have a valid social security number
  • The borrower has to make a 3.5% down payment that can be gifted to them by another person such as a family member.
  • An appraiser approved by the FHA must appraise the property
  • The minimum credit score needed to qualify for an FHA mortgage is a FICO score of 500 and a down payment of 10%.
  • The borrower should not have filed for bankruptcy in the last 2 years and should have improved credit
  • The borrower should not have foreclosed on a property in the last 2 years and should have improved credit

FHA Loan Benefits

With a down payment of 3.5, it is not hard to see why FHA loans are so popular. Other benefits of an FHA loan include:

  • Borrowers with a credit score as low as 500 can qualify
  • Borrowers who’ve gone through bankruptcy or been foreclosed on can still qualify for an FHA loan
  • If you have a good credit score but cannot afford the terms of a conventional loan

Mortgage Insurance for an FHA Loan

Mortgage Insurance for an FHA LoanYou might be asking yourself, so what is the catch?

Because an FHA loan does not conform to the stringent conditions of a conventional loan, borrowers are required to pay two different types of insurance premiums. One of those mortgage insurance premiums can be financed into the mortgage or it can be paid in full upfront. The other premium can be paid on a monthly basis.

Here is a breakdown of the two mortgage insurance premiums:

Upfront Mortgage Insurance Premium

This insurance premium is paid only once as an upfront monthly payment. The UFMIP computes as 1.75% despite the credit score.

Annual MIP

Though it is called an annual Mortgage Insurance Premium, it is actually paid on a monthly basis. The premium is added to the borrower’s mortgage payment.

Due to the amount of risk involved for the lender, the house has to be appraised by an approved appraiser.

How Long Will You Pay FHA Insurance For?

The length of time for which you will pay for the annual MIP varies depending on the LTV (loan-to-value) ratio on your loan and the amortization term.

You are required to pay mortgage insurance premiums for the entire duration of the FHA loan if at the time when you took the loan the LTV was greater than 90%. However, if the LTV is less than 90% you will pay annual MIP for the length of the Oakland Park FHA Loans or 11 years only whichever happens first.

Below is a table that helps explain this information:

Length of Loan

Down Payment

Duration You Will Pay Annual MIP

Less than 15 years

Below 10%

Life of FHA loan

Less than 15 years

10% or more

11 years

More than 15 years

Below 10%

Life of FHA loan

More than 15 years

10% or more

11 years

NHL Lending is approved to help you get an FHA loan. If you still have a hard time understanding the concept of FHA loans or would like to compare FHA loans against conventional loans, feel free to get in touch.