An FHA Loan is a very popular route for the first time homebuyer to take, but an FHA loan is not a program reserved only for first time homebuyers. You can buy your third or fourth home with an FHA loan. The only stipulation is that you may only have one FHA loan at a time.
The Federal Housing Administration (FHA), a wholly owned government corporation, was established under the National Housing Act of 1934 to improve housing standards and conditions. Its goal was to provide Americans with an adequate home financing system through insurance of mortgages and to stabilize the mortgage market.
Because the FHA loan program is designed with first-time homebuyers in mind, it allows for a lower minimum down payment and credit score than a convention loan offering greater flexibility. While FHA Loans are the most popular route for first time homebuyers, they aren’t the only one. Contact us to learn about other options if you’re a first-time homebuyer. You might qualify for aid.
FHA Benefits & Eligibility Requirements
- Flexible FICO credit score requirements (starting with 580)
- Down payments as low as 3.5%
- You have not owned a home in the last 3 years
- You do not have any other FHA loan at the time (in line with the requirement above)
- The home must remain your primary residence for 12 months
FHA Loan FAQs
Are there limits on the loan amount?
In 2020 FHA loan limits were raised to a maximum of $741,750 for single-family-units in King, Snohomish and Pierce counties. You can find the loan limits for all counties by searching here, or reach out to your loan officer.
Do I have to pay mortgage insurance?
The FHA loan program does require that you pay mortgage insurance for the life of the loan. However, you will be saving with a lower down payment initially and with growing equity you may be able to refinance with a different loan type as early as 6 to 18 months after your purchase date to say farewell to the PMI. We will continue to monitor these opportunities with you after the close of your FHA loan, and if you have any major changes in your equity or financial situation you should reach out to your loan officer for a mortgage check-up at any time.
Which types of properties are eligible for FHA loans?
Single-family homes, condos, and duplexes are all qualifying properties with the FHA loan program. There are specific situations when investments and second homes can be purchased with the FHA program as well
What’s the true cost of owning a home?
Great question! The total monthly cost of homeownership includes principal, interest, taxes, and insurance (PITI). That’s what makes up your mortgage payment. On top of that, you will need to factor in your utilities.
What if I don’t have enough saved for a 3.5% down payment?
It’s still possible to become a homeowner without a down payment ready to go. In Washington State, down payment assistance (DPA) programs can help with all or part of the down payment for qualifying buyers. If you’re interested in these DPA programs, speak with a mortgage adviser to learn about their benefits, costs, and qualification options or attend one of the free classes our specialists host regularly. (will want to somehow hyperlink to Tyson Walker’s email/page somewhere in here – he’s the one certified to do these loans and classes in our office)
Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency.