FHA Home Loans

A FHA loan may be for you if you have

• Two years of steady employment (preferably with the same employer)
• A minimum credit score of 600 or higher
• Less than two 30-day late payments to debtors in the last two years
• 30% of your gross (before taxes) income available to cover mortgage payments
• Monthly debt that does not exceed 43% of your monthly income
• Interested in keeping monthly payments as low as possible

What you need to know when purchasing a home

Down payments are easy. Use your own savings or money that is gifted from a family member. In fact, gifted money can be up to 100% of your down payment. Or, consider grant money from a state or local government down-payment assistance program. Keep in mind, while the seller can offer concessions like paying closing costs, it is prohibited for them to help pay for upfront costs with this loan option.

It's also important to know that this is a government-backed loan that requires mortgage insurance premiums (MIPs) upfront, as well as annual mortgage insurance — regardless of down payment amount. The annual mortgage insurance premium varies based on loan amortization term, loan amount, and your loan-to-value (LTV). If you make a down payment of at least 10%, you can have that insurance removed after 11 years. Should you make a lower down payment, you cannot remove FHA mortgage insurance. If this is the case for you, know that you can refinance into a new loan program — such as a conventional loan — if it makes financial sense later on.

What you need to know when refinancing a FHA loan

Many homeowners look to refinancing because they want better rates, lower monthly payments, and access to cash. While an FHA streamline refinance can help with most of that, it cannot provide you cash back. Through an FHA streamline refinance, you can benefit from:

• Better rates
• Lower monthly mortgage payments (than you're currently paying)
• No appraisal if you already have an FHA loan

If you need a home loan but are worried about poor credit or having to make a large down payment, consider an FHA loan. It's one of many loans available to you from American Financing.