What is an FHA Loan?

 Many first time Florida homebuyers want to know, what is an FHA loan? And, what are the advantages over other types of Florida mortgage programs? For many FHA loan applicants the FHA loan presents several advantages over a traditional home loan. The FHA loan is a government-backed loan that is pre approved based upon a common sense approach to Florida home loans rather than a credit score driven approach used by most conventional home loan programs.

Here are a few advantages of the  FHA loan.

 Government Insured

The most important aspect of an FHA loan is that it is insured by HUD and guarantees private FHA approved Florida mortgage lenders against default. This means that if an FHA Loan applicant defaults on the  FHA loan, FHA will repay the lender. Because these FHA loans are guaranteed by HUD, it represents a very low risk opportunity for the FHA lender. With this Florida FHA loan guarantee, mortgage lenders  provide FHA loans to many loan applicants that they otherwise not quality. It helps Florida FHA loan applicants with low credit scores buy a Florida home. The FHA loan opens the door for almost anyone who has shown the ability to make the payments to purchase  a Florida home.

No Restrictions

Unlike many other loan programs out there, with the FHA loan there are no restrictions for who can get approved FHA loan. The qualify FHA loan applicants still have to display a minimal level of creditworthiness, but you do not have to have a minimum credit score to qualify. For example, you do not have to be a veteran in order to get an FHA loan. You simply fill out a full FHA loan application  and we will pre approve you for an FHA Loan. Most FHA lenders work with the FHA loan applicants in every market. Therefore, the access to this type of FHA loan is unparalleled in the industry.

Lowest Down Payment

Another way that FHA loans help Florida home buyers is with a reduced down payment. With this type of loan, you can realistically expect to put about 3.5 percent down on the house. With a regular Florida home loan, you might be required to put down as much as 10 to 20 percent. This can add up to a substantial amount of money and eliminate many potential buyers. If you think you do not have enough money saved up for a down payment to buy a house, an FHA loan is definitely something that you should consider.

Upfront PMI

With FHA loans, they will charge you an upfront fee to cover mortgage insurance. Their closing costs can be lumped into the loan, so you have to be careful to see what you are paying. In some cases, this fee can actually add up to more than PMI with a normal mortgage would. The upfront mortgage insurance premium usually works out to about 2.25% of the loan amount. On a $100,000 loan that works out to $2250 in mortgage insurance. 

In addition to the upfront mortgage insurance premium, you will also have to pay a monthly amount for mortgage insurance. In most cases, this is about 0.55% of the loan amount. Therefore, you have to consider your options carefully with this type of mortgage. You will save in some areas and pay more in others. Compare your options and decide if an FHA loan is right for you.

For Florida banks and other mortgage lenders, FHA mortgage loan financing offers the security of a government insured Mortgage. Win/Win!

To learn more, call today at 1-800-570-0448 or just use our fast and easy quick application!

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