Home loans backed by the Federal Housing Administration that offer some of the most affordable options for your next purchase or refinance.
Low down payment options
- As little as 3.5% down
- Very competitive rates
- Because the loan is backed by the federal government, borrowers with lower incomes or credit scores can qualify for a much lower interest rate than they could on a conventional loan.
More forgiving approval guidelines
- Qualify with a credit score as low as 500
- DTI ratios above 50% are permitted under certain circumstances
- Closing costs can be rolled into the loan amount
- Gift funds and non-occupant co-borrowers are acceptable
What is an FHA loan?
You’re thinking about getting a mortgage loan, but don’t know what an FHA loan is. An FHA insured loan is one that is backed by mortgage insurance through the US Federal Housing Administration. The lender is protected against losses by the mortgage insurance, which is an advantage. Here’s what an ‘FHA loan’ is and what it means to you. It’s a great way to finance a home, but you need to choose a lender carefully.
Why Consider an FHA Loan?
It’s a question that is often asked by homebuyers. These loans are a great option for many people because they are flexible and offer lower down payments. However, these loans are not available for everyone and you must shop around to find the best loan for you. You can choose to apply with a conventional lender, or you can opt for an FHA loan. An FHA loan will help you get the home you want without breaking your budget.
What’s the difference between a FHA Loan and a Conventional Home Loan?
One of the biggest differences between an FHA loan and a conventional loan is the down payment requirement. For a conventional loan, you must have a DTI of at least 50%. If you have a lower DTI, you may be able to qualify for an FHA loan with less money down. The advantage of an FHA loan is that you can borrow up to 96.5% of the value of your home.
However, one significant difference between the two types of loans is the mortgage insurance premiums. FHAs charge upfront mortgage insurance that is 1.75% of the loan’s size. This premium is not recoverable if you default on the loan. This upfront mortgage insurance is not charged with a conventional loan, but it is a necessary part of the loan process. Despite the lower upfront cost, FHA loans are not as affordable as conventional loans.
When deciding between an FHA and conventional home loan, you need to consider your credit score. If you have a lower credit score, an FHA loan is the best option. A conventional loan requires a credit score of at least 620, though some lenders may have higher requirements. If your credit score is higher, you can still qualify for an FHA loan, but you’ll want to shop around to make sure you get the best deal.
Let Arizona Lending Group Assist You With Your FHA Loan!
Our experienced mortgage professionals will review your complete financial profile, including your income, assets, and credit to make it simple & easy.
Mortgage Broker in Scottsdale, AZ
“ARIZONA LENDING GROUP, INC., AZ MB-1023670 & NMLS 2137491. THE PRINCIPAL AND INTEREST PAYMENT
ON A $203,500 30-YEAR FHA FIXED-RATE LOAN AT 2.625% AND 96.5% LOAN-TO-VALUE (LTV) IS $974.31. THE
ANNUAL PERCENTAGE RATE (APR) IS 3.703% WITH ESTIMATED FINANCE CHARGE OF $5,600. PAYMENT
INCLUDES A ONE-TIME UPFRONT MORTGAGE INSURANCE PREMIUM (MIP) AT 1.75% OF THE BASE LOAN
AMOUNT AND A MONTHLY MIP CALCULATED AT 0.85% OF THE BASE LOAN AMOUNT. THE 0.85% MONTHLY
MIP IS REQUIRED FOR A SPECIFIC PERIOD OF TIME REGARDLESS OF YOUR DOWN PAYMENT OR EQUITY IN
YOUR HOME. THE PRINCIPAL AND INTEREST PAYMENTS, WHICH WILL CONTINUE FOR 360 MONTHS UNTIL
PAID IN FULL, DO NOT INCLUDE TAXES AND HOME INSURANCE PREMIUMS, WHICH WILL RESULT IN A HIGHER
ACTUAL MONTHLY PAYMENT. RATES CURRENT AS OF 10/26/2021. SUBJECT TO BORROWER APPROVAL.”