A FHA Loan is a loan option offered through the Federal Housing Administration. This financing option is available for all income levels and allows a co-applicant to help the borrower qualify even though they will not live in the home. A FHA loan may be a good option to consider if your client:

• Expect to buy a lower priced home with a small down-payment
• Have less cash available up front for the down-payment and closing costs

Features

• Low down-payment options.
• Available for a variety of loan terms.
• Requires mortgage insurance.
• Flexible income, debt, and credit requirements.
• Down-payment and closing costs may come from a gift or grant.
• A co-applicant can help you qualify even though they do not live in the home.
• Available in a variety of fixed-rate and adjustable-rate loan options

Considerations

• The borrower typically has to pay an up-front, as well as a monthly FHA mortgage insurance premium.
• The borrower typically can only have one FHA mortgage at a time.

Fixed-Rate Mortgage (FRM)

A mortgage interest that are fixed throughout the entire term of the loan.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes during the life of the loan according to movements in an index rate. Sometimes called AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).