The perfect mortgage solution for first-time home buyers.
Buying a home in today's economy can be incredibly challenging—especially for first-time home buyers. Thankfully, FHA loans are designed to make home-buying dreams a reality for borrowers like you. Read on to find out what an FHA loan is, how to qualify for an FHA loan, and how our team at Northwest Alternative Mortgage can help you leverage this advantageous mortgage option.
* Northwest Alternative Mortgage is not HUD approved and is not a direct lender for FHA loans. Instead, we act as a mortgage broker on FHA loans and brokers FHA loans to reputable, competitive, FHA HUD approved lenders.
Common Features of FHA Loans
Although FHA loans* are often an incredibly advantageous lending option for those who qualify, here are some of the key rates and terms to bear in mind:
Interest Rates: FHA mortgage interest rates are generally competitive with conventional mortgage rates. Your specific interest rate will depend on several factors, including your credit score, the amount of your down payment, and the term of your loan.
Down Payment: FHA loans require a minimum down payment of 3.5% of the purchase price. This is lower than the down payment required for many conventional mortgage loans.
Mortgage Insurance: FHA loans require both an upfront mortgage insurance premium (MIP) and an annual MIP. The upfront MIP is typically 1.75% of the loan amount and can be rolled into the loan. The annual MIP ranges from 0.45% to 1.05% of the loan amount, depending on the size of the down payment and the length of the loan.
Loan Limits: FHA loans have limits on the amount you can borrow, which vary by location. In most areas, the maximum loan amount for a single-family home is $356,362 in 2022, but this can be higher in certain high-cost areas.
Credit Score: FHA loans typically have more lenient credit score requirements than conventional loans. While a credit score of 620 is typically the minimum required for a conventional loan, FHA loans may be available to borrowers with credit scores as low as 500, although a higher score may be required to qualify for the best interest rates.
Loan Terms: FHA loans are available in a variety of terms, including 15-year and 30-year fixed-rate loans, as well as adjustable-rate loans. The term you choose will affect your monthly payment and overall interest costs.