The Federal Housing Administration (FHA) was established in 1934 to improve the housing market and protect approved lenders from borrower default. This is made possible by insuring the loans made by these lenders. A number of loan products are offered by the FHA including programs for purchasing new homes, refinancing current mortgages, financing special renovation projects, and even reverse mortgages. America Mortgage, LLC offers exceptional rates and terms on FHA loans throughout Monroe and all of Washington.
First-time homebuyers often find that FHA loans are a great choice for their needs given the low down payment and credit score requirements of FHA loans. First-time homebuyers could potentially qualify for an FHA loan with credit scores as low as 580 and a minimum down payment of only 3.5%. If a borrower does not have the cash on hand to meet the down payment requirement, family members can even offer it as a gift.
Buyers interested in taking on a rehabilitation project can make use of an FHA 203k loan to combine the purchase of the home and the cost of needed repairs into a single loan. Current homeowners will find that the FHA offers quality refinance programs as well. Depending on a borrower’s needs, cash-out refinance and streamline refinance options are available.
No matter what your homeownership goals may be, there are certain requirements that must be met for all Monroe FHA loans.
Monroe FHA Loan Requirements
- Credit Score – A minimum credit score of 580 is needed. If a borrower has a score between 500 and 579, they may still be able to qualify but higher down payments or interest rates may be assessed.
- Debt-to-Income Requirements – A debt-to-income (DTI) ratio of 43% or less is required. In special cases, a DTI ratio of up to 50% can be approved.
- Down Payment – The minimum down payment required is 3.5% of the purchase price. Borrowers may be asked to make a larger down payment if credit score and DTI requirements are not satisfied.
- Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.
Lenders are able to approve loans with such low down payments, rates, and credit scores because of mortgage insurance. Mortgage insurance is what protects lenders when borrowers default on their mortgages. Every FHA loan requires two mortgage insurance premiums (MIP) to be paid. The FHA adds an up-front premium of 1.75% of the purchase price to your total mortgage amount. The second premium is added to your monthly mortgage payment. This premium will fall between .70% and 1.05% of your annual mortgage balance and will be based on factors including the total loan amount, your loan-to-value (LTV) ratio, and the length of your mortgage.
The FHA sets maximum loan limits by county which can range from $271,000 up to $636,500 in high-cost areas.
Monroe FHA Loan Limits
At America Mortgage, LLC, we offer great rates and terms on FHA loans for both purchases and refinances to homeowners throughout Washington. Contact us today with any questions you may have regarding Monroe FHA loans or to begin the pre-qualification process!