There are many different types of loans that a home buyer may consider for financing a new home purchase. A Conventional Loan is the most common mortgage, but for some buyers, other loan options may be advantageous. With an FHA loan, a portion of the loan is guaranteed by the Fair Housing Administration, so lenders are able to provide these loans with lower down payment amounts. A typical down payment for an FHA loan is just 3.5% as compared to a 5% – 20% down payment for most conventional loans.
In addition, FHA loans may be easier to qualify for as they allow lower credit scores, lower debt to income ratios, and permit less elapsed time since significant prior credit problems such as bankruptcy. An additional advantage of an FHA loan is that interest rates are usually lower than with a conventional loan. There are mortgage insurance premiums (MIP) required upfront and annually, however, the upfront MIP may be rolled into the loan to reduce closing costs.
At Petriello Law, we have years of experience working with all types of loans, including FHA loans. We look forward to working with you to give you the best opportunity for a successful closing. If you are in need of a real estate attorney, please reach out by phone or e-mail today.