What is an FHA loan?
An FHA Loan is a federally insured loan that helps provide financing for individuals with lower income and FICO requirements. The main use of an FHA loan is to help borrowers purchase a primary residence with only 3.5% down payment. The secondary use of an FHA loan is to provide cash out for an individual seeking debt consolidation or home improvements up to 80% loan to value. These benefits can be achieved despite the individual having poor credit scores as low as 500. This program provides financing to borrowers that typically would not be able to qualify for a conventional loan.
What are the benefits of an FHA loan?
- Purchase a home with only 3.5% down payment as long as it’s a primary residence and below county loan limits
- 30 year fixed rates comparable with conventional financing
- Fico’s as low as 500 with a good 2-year payment history
- Cash-out for debt consolidation or home improvement up to 80% of the home value
- Refinancing options available every 210 days to reduce interest rates without an appraisal or income requirements (streamline)
- NO prepayment penalties. FHA borrowers can pay off a loan early without any financial penalties
Should I use an FHA loan to pay off debt?
This depends on your individual scenario which we at Adequate Mortgage can review in a matter of minutes. Typically utilizing an FHA loan to eliminate debt is a good option as long as you are reducing your monthly debt obligations and the debt was incurred due to an unforeseen financial emergency.
Should I use an FHA loan for home improvement?
This also depends on your individual scenario and we at Adequate Mortgage are happy to review your options and help you come to the best solution. However, an FHA loan is beneficial when pulling cash out in order to upgrade or add additional bedrooms/bathrooms to your property.
If I have credit issues, can I qualify for an FHA loan?
Yes, an individual can qualify for an FHA loan as long as they have established a record of on-time payments for the last two years and their credit score is above 500. FHA loans allow forgiveness for one instance of a past credit issue as long as the last 2 years have shown punctual payment history on all debts.
What are the loan limits for an FHA loan?
Currently, the maximum loan limit for a single-family residence is $356,362 with high-cost areas up to $822,375. To estimate the maximum loan limit for your area you can use the link below to calculate this amount.
Why work with Adequate Mortgage Service for your FHA Loan needs?
We are very knowledgeable about FHA Loans through personal experience. Our team is happy to assist with all the questions you may have about this process and how it could be beneficial to your specific circumstance.
What kind of documentation is needed to get started?
- Loan Application which can be taken over the phone in 15 minutes or via this link https://form1003.my220.com/index.php/form?domainName=www.timkylelends.com
- Current Mortgage Statement or Purchase agreement.
- Homeowners Insurance Declarations Page
- Driver’s License and Social Security Card – front and back
- Current pay stubs covering the last 30 days
- Current W2’s covering the last two years.
- Current tax returns covering the last two years.
- Purchase requires proof of down payment seasoned for 60 days.