What is the FHA Loan?
FHA loans have been helping people become homeowners since 1934.
How do they do it? The Federal Housing Administration (FHA) – which is part
of HUD – insures the loan, so that we can offer you a better deal.
- A FHA home loan allows for a low down payment
- Helps reduce the cash needed to purchase a home
- Minimum 580 FICO
- Down payment may be a gift
- Non-occupant co-borrower may be allowed
- FHA rates are lower in comparison to Conventional
- Cash Out Refis up to 80% LTV
One must make at least a 3.5% down payment in cash. Now, that money can come from your own bank account, or it can be a gift, or you can cash out some investments you may have to get it. You cannot, however, use a credit card or payday loan.
Whichever source you use for your cash down payment, that source must be verified by your lender and you may have to provide documentation and evidence showing where the funds come from. You must also prove you can cover closing costs and other fees when the escrow closes, from approved sources. That 3.5% is 3.5% of either the appraisal amount of the property, or the actual sales price of the home.