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City Edge Financial

FHA Loans

FHA are government-backed loans that offer homebuyers a chance to buy a home with a low down payment. You don’t need perfect credit or a low debt-to-income ratio. FHA loans have flexible guidelines thanks to the government guarantee, making it easier for more people to afford a home.

What are FHA Loans?

FHA loans are backed by the Federal Housing Administration. The FHA doesn’t underwrite or fund the loans; however, they guarantee them for lenders. FHA-approved lenders can underwrite and fund loans, knowing that the FHA has their back if a borrower stops making payments.

How do FHA Loans Work?

Like any other loan, you apply with a mortgage broker or lender to get an FHA loan. FHA loans, however, have flexible qualifying guidelines, making them easier to afford.

Borrowers can get approved with lower-than-average credit scores and higher-than-normal debt-to-income ratios..

All borrowers must prove they’ll live in the property as their primary residence and proving two years of stable income and employment is important too.

Are FHA Loans Only for First-Time Buyers?

FHA loans have a reputation for being a first-time homebuyer program; however, anyone can use the program that qualifies.

It makes a great first-time buyer program because of the low down payment requirements and flexible credit guidelines, but you can use the program if you’ve owned a home before but don’t qualify for conventional financing.

What about FHA Mortgage Insurance?

FHA loans charge mortgage insurance upfront and annually to cover the cost of the FHA’s guarantee. The insurance allows the FHA to continue guaranteeing loans and banks to continue offering flexible guidelines.

Can you Refinance an FHA Loan?

FHA loans have several refinance options, whether you’re trying to get a lower interest rate, change your term, or cash out your home’s equity. FHA refinance loans have the same flexible guidelines as FHA purchase loans, allowing borrowers to make the most of the investment in their homes.

How to get an FHA Loan

Contact us today if you think an FHA loan is a good fit for you. We’ll help you understand how FHA loans work, how they’d fit in with your purchase or refinance needs and find you the most competitive rates and terms for FHA financing.