FHA mortgage loans assist first time buyers

Don't be frustrated if you're a first-time home buyer and don't have enough down payment for buying a home at today's low mortgage rates. FHA-insured mortgages may provide the financing your need for buying your first place.

FHA flexible on underwriting requirements

Mortgage underwriting is the process of approving borrowers for mortgages. Conventional mortgage lenders typically require 20 percent down and closing costs paid upfront. FHA guidelines permit down payments of 3.5 percent for eligible borrowers with FICO credit scores of 580 or more. Borrowers with credit scores between 500 and 579 may qualify for FHA loans, but are required to pay a minimum of 10 percent down.

FHA down payment sources flexible

FHA requires prospective borrowers to document the source of their down payment funds, but allows borrowers to obtain cash as gifts from family, friends, and through employer programs that provide cash toward employee home purchase costs.

Low mortgage rates can be a strong incentive for buying a home; it's possible to save thousands of dollars over the life of a mortgage loan by lowering your mortgage rate. Using mortgage calculators can help with estimating key information that you'll need when buying a home. The mortgage comparison calculator can help with comparing potential savings based on lower mortgage rates. You can plan for mortgage shopping using a mortgage prequalification calculator. This mortgage calculator helps with determining how much you can afford to borrow based on your income and debt levels.

What about mortgage insurance?

FHA acts as a mortgage insurer by indemnifying FHA-approved mortgage lenders against losses caused by foreclosure. FHA loans require low down payments, and also require borrowers to pay FHA mortgage insurance in two stages.

Up-front mortgage insurance premium (UFMIP): This portion of the mortgage insurance premium must be paid at closing, but many borrowers chose to handle it by rolling it into their loan amount. Under new guidelines, the UFMIP has been reduced to 1 percent of the mortgage loan amount. The annual MIP is based on your loan-to-value ratio (LTV) and is pro-rated monthly and added to your monthly mortgage payments.



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