FHA Loan Basics

The FHA loan program can help buyers who might not meet typical loan qualifications. Let’s find out if the FHA loan is right for you!

Hi this is mitch matt with riviera financial mortgage in beverly hills another day in the mortgage business i want to let you know that i really appreciate you letting me assist you in getting the best mortgage financing for your home purchase or refinance i also want to let you know that i keep an eye on the market and developments and i’m always trying to keep

You in front position so that you’re ready to take advantage of any opportunity or have the best solutions to any problems that might arise so with that in mind i put this little informational message together please just take a moment to watch it let me know what you think and let me know if you have any questions that i can help you with thank you so much fha

Is a popular home loan program that is often used by first-time home buyers knowing the requirements and benefits is important when you’re considering it as a home loan in this video we’re going to cover the basics of the fha home loan program let’s begin with understanding what is an fha loan an fha loan is a mortgage made by an fha approved lender and insured

By the federal housing administration borrowers can purchase a home with lower credit score qualifications and down payments than conventional guidelines allow fha loans aren’t just for first-time homebuyers you can be approved regardless of whether you currently have or have previously owned a home the federal housing administration was created in 1934 to give

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Renters in the u.s better loan options for buying a home back then you typically needed a 50 down payment and enough income to pay the loan off in three to five years over time the fha loan program guidelines allowed borrowers to make a down payment as low as three and a half percent and pay off the loan over a 30-year term lenders were and still are willing to

Take the risk of making fha loans because of the mortgage insurance premiums borrowers pay to protect them against financial losses if they default fha loans essentially work the same as other home loan programs you need to qualify based on your income credit history employment history and verify you have or can get a gift for the down payment and closing costs

However the flexibility of fha loans may work best if your credit score is between a 500 and a 619. if your total debt to income or dti ratio which is a measure of your total debt compared to your income is higher than the 50 conventional dti ratio maximum if you need a loan amount at or below the current fha loan limit and the county you’re buying in if you

Want to buy and live in a two to four unit multi-family home with a three and a half percent down payment and use rental income to help you qualify if you want to buy a fixer-upper home with a three and a half percent down payment and roll the renovation costs into your loan amount if you need to qualify for a mortgage with the income of a co-borrower who won’t

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Live in the home if you’ve had a bankruptcy in the past two or more years or if you’ve had a foreclosure in the past three or more years and finally you will want to look at the flexibility of an fha loan if you cannot qualify for a conventional loan it’s important to understand how fha loan mortgage insurance works so fha borrowers have to pay two types of fha

Mortgage insurance to protect fha approved lenders from the financial risk of defaults the first is an upfront mortgage insurance premium or uf mip of 1.75 of your loan amount which is charged at closing and typically added to your mortgage balance the second is an ongoing annual mortgage insurance premium or mip that ranges from 0.45 to 1.05 depending on your

Down payment and loan term it’s charged annually and divided by 12 and then added to your monthly payment there are some important differences between fha mortgage insurance and conventional private mortgage insurance or pmi you’ll typically pay fha mip for the life of your loan this is true if you make a minimum fha three and a half percent down payment however

If you can make at least a 10 down payment mip drops off after 11 years you can get rid of conventional pmi or private mortgage insurance once you can prove you have 20 percent equity your credit score doesn’t impact your premium unlike private mortgage insurance fha mortgage insurance premiums are the same regardless of your credit score which could result in a


Lower monthly payment than a conventional loan so what are the advantages of an fha loan some of the biggest benefits of an fha loan include qualifying with a credit score as low as 500 a low down payment a dti ratio above 50 and the flexibility to add a co-borrower’s income to get approved even if the person won’t live in the home you’ll want to check with your

Lender to find out about their specific guidelines so make sure you’re working with a state licensed mortgage professional and get your questions answered the fha loan could be the perfect program for you to get into the home of your dreams thank you for watching my video i hope you found it helpful and i hope you would like to discuss it further so if you would

Please feel free to call me mitch mullatt riviera financial mortgage 424-290-8294 you can also email me mitch riviera financial.com you can also find me on instagram at mitchell millet or on my facebook home page mitch millett riviera financial beverly hills thank you so much look forward to talking to you soon and wishing you much much success in the future you

Transcribed from video
FHA Loan Basics By Mitch Milat