FHA Purchase
An FHA loan is a government-insured mortgage with flexible credit and down payment requirements. It’s available with a fixed rate or an adjustable rate.
What Is an FHA Loan?
An FHA loan is insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). Because the government insures the loan, lenders can offer more flexible requirements, so FHA loans are often easier to qualify for than conventional loans. FHA loan amounts are limited by county.
An FHA loan is often a good fit if:
- You have less-than-perfect credit, or you have faced financial difficulty in the past.
- You’re short on cash for a down payment or closing costs, or have less than 20% equity in your home.
- You’re buying a home to live in. FHA loans are for primary residences.
- You’d like an assumable loan, which a future buyer may be able to take over.
Fixed Rate or Adjustable Rate
Fixed Rate
- Do you have less-than-perfect credit and still want to qualify for a home loan? Would you like an assumable loan?
- Do you want the same principal and interest payment for the life of the loan?
You can choose from a range of fixed-rate loan terms.
Adjustable Rate
- Do you want a lower initial interest rate, but have struggled with your credit in the past?
- Do you plan on refinancing or moving in the next five years?
An FHA adjustable-rate loan usually starts with a lower rate than a comparable fixed-rate loan. After the initial period, the rate and payment can change. It can be a good option if you plan to move or refinance within a few years.
Fixed rate vs. adjustable rate over time
- Fixed rate
- Adjustable rate
Interest rate
Mortgage Insurance
FHA loans require mortgage insurance premiums (MIP): an upfront premium, which can usually be added to the loan, and an annual premium paid as part of your monthly payment. Depending on your down payment, the annual premium may last for the life of the loan. Many homeowners later refinance into a conventional loan to remove it.
Ready to talk about your loan?
Call a Verity Loans loan officer. We’ll walk you through your options and answer your questions.