FHA Mortgages

Federal Housing Administration (FHA) loans have more liberal qualification requirements than other loan programs, making them attractive for first time homebuyers and low income families. FHA Loans typically have lower credit score requirements, with no income limit or geographic restrictions. They also generally have lower down payment requirements (as low as 3.5%), lower monthly insurance premiums, and lower closing costs. Sellers are allowed to contribute up to 6% of the sale price to assist with closing costs, and gift funds may also be used. FHA also allows non-traditional credit, which can be helpful for self-employed borrowers. Debt-to-income ratios generally require that your house payment should not exceed 31% of your income, and your total debt should be below 43%.
FHA Loans can be used to buy an existing home, build a new one, or refinance a current property, however, the home must be owner occupied. The FHA also offers home improvement loans—the Full 203k and 203k streamline—which allow a borrower to close on a home that does not currently meet FHA requirements, with the contingency to make the necessary improvements to the home.