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Senior Mortgage Adviser

Claudio Prunotto

FHA Loans

FHA loans have been helping people become homeowners since 1934.

Some possible benefits of FHA loans are:

  • Lower down payments
  • Less strict credit qualifying

What does FHA have for you?

Buying your first home?

FHA might be just what you need. FHA loans permit lower down payments and often times the seller is allowed to pay for a portion of your closing costs. Available on 1-4 unit properties.

Want a fixer-upper?

FHA has a loan that allows you to buy a home, fix it up and includes the repair costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.

Want to make your home more energy efficient?

You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.

FHA loans have been helping people become homeowners since 1934. How do we do it?

The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.

FHA allows a buyer to purchase a home with lower down payments. They tend to be more lenient on areas such as credit, funds to close and co-borrowers.

Most loans use a method of analyzing credit called credit scoring in the underwriting process. Studies have demonstrated a direct relationship between low credit scores and higher mortgage delinquency rates. As a result many lenders have established minimum credit scores at which they will accept loans. Unfortunately, a lack of credit, old delinquencies or incorrect information on the credit report can cause a low credit score. FHA does not have specific credit score requirements. Although a high credit score may assist in getting the mortgage approved, a low score is not automatically cause for denial. If the credit scores are low, then it is up to the borrower to demonstrate his/her ability and willingness to pay the loan back. This allows the borrower to explain the circumstances surrounding the credit difficulties and have that explanation considered in the underwriting process.

The interest rate that you select will also have a bearing on the total costs. If you select a lower rate so that you can reduce your payment, you may end up paying additional money towards "points". At the same time if you are comfortable with a slightly higher payment you may find a lender that is willing to reduce the costs to close in favor of a higher interest rate.

FHA may allow the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, grants, loans from retirement accounts and seller contributions.