What Are FHA Loans?
At DC Lending LLC, our team of loan officers has years of experience working with FHA loans. We are always happy to help first-time homebuyers get the loan they need. FHA loans are the most popular type of loan among first-time homebuyers because of the lower required credit score and down payments. The U.S government backs these loans, and the Federal Housing Administration(FHA) insures them. All FHA loans are fixed-rate mortgages with either 15 or 30-year terms because the down payments and credit scores required are much lower than other home loan options. There are two required mortgage insurance premiums associated with all FHA loans. The first is the upfront mortgage insurance premium; this is about 1.75% of the total loan amount and is rolled into the loan. The second is an annual mortgage insurance premium. Monthly mortgage insurance premiums will continue until the house is sold or re-financed out of the FHA loan.
Guidelines And Restrictions For FHA Loans
There are restrictions for both lenders and borrowers when it comes to FHA loans. For the borrower, there are other requirements needed to qualify for this type of loan. Some of these include two-year employment history and verifiable income. The credit scores can be between 500-579 with a 10% down payment or 580 and higher with a 3.5% down payment. The property for which you are getting the loan must be your primary residence and needs to be appraised by an FHA-approved appraiser and pass all of the necessary guidelines. There are also restrictions on your debt-to-income ratio. The loan officers at DC Lending LLC are experts in dealing with FHA loans and would be happy to assist you in finding the best option for you!
Types Of FHA Loans
Besides the original FHA loan, the Federal Housing Administration offers four other kinds of loans.
Home equity conversion mortgage(HECM) is a prevalent reverse mortgage option that is insured by the FHA. This mortgage allows homeowners over the age of 62 that have a large sum of equity to draw on the value of their home.
FHA 203(k) has two different variations. These loans allow you to not only buy a home but also renovate it using just one mortgage. A limited 203(k) loan offers a more straightforward application, and the repairs and renovations can total $35,000 or less. A standard 203(k) has more paperwork involved and includes improvements over $5,000, but the total value of the property can not exceed the FHA mortgage limit.
The FHA also backs Energy-efficient mortgages(EEM) and allow homeowners to buy more energy-efficient homes or to buy a house and remodel it with energy-efficient upgrades.
The last type of FHA loan is section 254(a) loan, also known as the graduated-payment mortgage. This type of loan is a good option for borrowers whose income will increase down the road. The basic concept is that the payments will start small and gradually increase over the years. There are five different payment plans. Three of the programs increase payments over five years by either 2.5%, 5%, or 7.5%. And the other two increase payments over ten years by either 2% or 3%. These plans allow homeowners to become more comfortable with their payments and slowly adjust to higher payment plans.
Camas Loan Experts
At DC Lending LLC, our loan officers in Camas strive to provide every one of our customers with the best loan option that suits their needs. As a family-owned company, we understand how important it is to communicate and take into account our customer’s needs and financial situations. Give us a call today or stop by our office and talk with one of our loan officers about the options available to you. And let us help you find a loan that you’ll love!