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:
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Expect to buy a lower priced home with a small down-payment
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Have less cash available up front for the down-payment and closing costs
Features
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Low down-payment options.
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Available for a variety of loan terms.
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Requires mortgage insurance.
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Flexible income, debt, and credit requirements.
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Down-payment and closing costs may come from a gift or grant.
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A co-applicant can help you qualify even though they do not live in the home.
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Available in a variety of fixed-rate and adjustable-rate loan options
Considerations
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The borrower typically has to pay an up-front, as well as a monthly FHA mortgage insurance premium.
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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).
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