Not everyone lives in a USDA Rural eligible location. For home buyers that reside in more populated cities, FHA can be a great alternative. The FHA loan can be especially good for first-time home buyers that need a mortgage that doesn’t require a large down payment. Although the FHA is not 100% financing like the USDA mortgage, it does offer some flexibility. Let’s discuss some FHA loan benefits below.
- FHA loans only require a 3.5% down payment. The down payment money can come from a family member as a gift. In addition, borrowers can use approved down payment assistance funds, grants, etc.
- FHA has closing costs similar to other loan programs. However, the FHA guidelines do permit the seller of the home to pay the home buyers closing costs – up to 6%. This is often more than enough to cover typical closing costs and escrow requirements.
- FHA upfront mortgage insurance premium of 1.75% can be added to borrowers’ loan.
- FHA loans have flexible terms – 15, 30 year fixed. Adjustable rates as well.
- FHA loans do not have any early payoff penalties – Sell your home or pay off your loan whenever you like without penalty.
- FHA upfront mortgage insurance premium of 1.75% can be added to the borrower’s loan.
- FHA does not have any income limits or property location limits like USDA.
- Borrowers can purchase any single-family home, townhome or FHA-approved condo that meets basic HUD requirements. The seller(s) of the home is not important.
In addition to the basic FHA loan, FHA also offers a HUD $100 down mortgage for specific HUD-owned homes. This is a great program in the fact that borrowers can purchase with very little money out of pocket. The only stipulation is the home must be HUD owned. Borrowers can check the HUD home list here.
Home buyer that have questions are encouraged to contact us at ph: 800-743-7556