FHA Loans are designed for borrowers who may have limited funds to close and less than the most desirable credit scores. FHA loan have FHA mortgage insurance, an initial premium that is financed as a part of the loan amount and monthly renewal premiums that are added to the mortgage payment. The property being purchased must pass FHA requirements which are more stringent that conventional loan requirements. In addition, the seller is required to pay some closing costs on an FHA loan that they are not required to pay on a conventional loan. FHA loans are assumable via fully qualifying assumption which can assist the owner is selling the property if rates have risen since his acquisition. Finally, FHA has FHA loan limits which are a yearly average of the sales prices in the particular FHA region. If prices in an area have risen dramatically in the last 11 months, the FHA loan limit may preclude an FHA loan for the amount now required by appreciation.
20+ years as a direct mortgage lender
· 1 decade ago