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FHA Loan

Competitive interest rates, flexible credit terms, and require a low minimum down payments.

FHA loans are a good option when you’re buying a home, refinancing an existing FHA loan, or need cash from your home’s equity.

First Time-Home Buyers

FHA loans are a popular mortgage choice for first-time homebuyers. That's because FHA loans have lower down payments and more flexible credit, income and asset requirements than conventional loans.

Conventional loans often have higher credit score requirements compared to FHA loans. You usually need to buy private mortgage insurance if you make a down payment of less than 20%. Lenders may want you to have a lower debt-to-income ratio (or "DTI") when you apply for a conventional loan.

FHA loan requirements for first time homebuyers

There are many requirements that can make FHA loans attractive to first-time homebuyers, including:

  • Down payments as low as 3.5% of the purchase price. This is particularly useful to homebuyers who do not have the cash to make a large down payment.

  • Lower minimum credit scores. At Smart Home Mortgage, we may be able to help you buy a home with an FHA loan with a credit score as low as 550.

  • Higher debt-to-income ratios. Lenders of conventional mortgages generally don't want your debt-to-income ratio to be higher than 45%. With an FHA loan, you can sometimes have a DTI as high as 56%.

  • Competitive interest rates. FHA loans can have rates competitive with conventional loans. Be sure to look at the annual percentage rate (APR) when you are comparing mortgage offers. APR shows the total cost of a loan, including interest payments and any closing costs, fees, and mortgage insurance you might have to pay.

FHA loans have other requirements you'll want to understand before you choose one. For example, you will need to pay an upfront mortgage insurance premium as well as an annual premium. There are also limits on the amount of money you can borrow.