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Although there are many similarities between FHA loans and all other home loans, there are also some big differences. FHA mortgage loans have lower interest rates, and credit guidelines are more relaxed than conventional loans, and only a 3.50% down payment is required.
In contrast to conventional mortgage products, which frequently require a minimum down payments of 5% or more of the purchase price of the home. FHA loans are only a 3.50% down payment. This money can be your own money, a gift from a blood relative, or from a down payment assistance program.
With most conventional loans, the maximum is just 3%. Typically borrower must pay, at the time of purchase, closing costs (the many fees and charges associated with buying a home). This program allows the borrower to finance many of these charges, thus reducing the up-front cost of buying a home.
To make sure that its programs serve low and moderate-income people, FHA sets limits on the dollar value of the mortgage loan. It is always changing, and does vary depending on which county the property is located, so be sure to ask your Cambria Mortgage Loan Officer about the area you wish to buy a home. For example, in the Minneapolis, St Paul MN area, the current FHA single family loan limit is $322,000, but is higher for duplexes, tri-plexes, and 4-unit homes. All must be owner occupied.
Mortgage insurance is required on all FHA loans. If your FHA loans starts out with less than 10% down or equity, your mortgage insurance is required for the life of the loan. If your loans starts at more than 10% down or equity, you will have mortgage insurance for at least the first 11-years of the loan. Conventional loans are able to eliminate mortgage insurance when you reach 80% loan-to-value (20% equity).
Lenders, and the crazy lender days from 2000 - 2006 are long gone. Bad credit, sub-prime, stated income, no doc, Alt-A, and everything else crazy is no longer available. FHA is your best option if you are a weak credit risk, but it is NOT a bad credit loan. You have to qualify, it has to make sense, and you have to have a little skin in the game (down payment). All applicants must have a minimum middle credit score of at least 620.
FHA also has a super cool loan to help you buy and fix up homes needing a little tender loving care. You can buy the home, and get the money to fix it all in one loan. Just like regular FHA loans, the FHA 203k loan only requires 3.50% down payment.
Visit our FHA 203k web page for more information, or just click here for a 203k loan application.
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Cambria Mortgage - St Paul Office
33 Wentworth Ave E, Suite 290
St Paul, MN 55118
Office (651) 552-3681 Fax (651) 994-6425
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33 Wentworth Ave E - St Paul, MN 55118. Joe Metzler, Licensed Mortgage Loan Originator NMLS # 274132. Minnesota Lic/Reg #: MN-MLO-274132. Wisconsin Lic/Reg #: 11418.
Equal Housing Lender (C) 1998-2018 - Joe Metzler for Cambria Mortgage. NMLS #322798