FHA Home Loans
A more flexible path to homeownership
Buying a home may feel out of reach when you have limited savings or less-than-perfect credit. An FHA loan can offer a more accessible path forward with a lower down payment requirement and flexible qualification guidelines.
At FVSBank, you will work with a local mortgage lender who will help you understand your options, prepare for the application process, and choose financing that fits your goals.
What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development.
FHA insurance makes it possible to offer home financing to qualified borrowers who may not meet the requirements of some conventional mortgage programs.
FHA home loans may be used to purchase or refinance an eligible primary residence.
FHA loan highlights
Down payments as low as 3.5%
Qualified borrowers may be able to purchase a home with a down payment as low as 3.5% of the purchase price.
Flexible credit guidelines
FHA loans generally offer more flexible credit qualification guidelines than many conventional loan programs.
Multiple term options
Depending on program availability and borrower qualifications, fixed-rate terms may include: 15, 20, 25, and 30-year options. Adjustable-rate options may also be available.
Purchase or refinance
An FHA loan may be used to: purchase an eligible home, refinance an existing mortgage, or replace an existing FHA loan through an eligible FHA streamline refinance.
Who may benefit from an FHA loan?
An FHA loan may be worth considering when you:
- Have limited funds available for a down payment
- Are working to establish or rebuild your credit
- Do not qualify for your preferred conventional mortgage
- Are buying your first home
- Want a fixed-rate mortgage with predictable principal and interest payments
- Plan to use the property as your primary residence
You do not have to be a first-time homebuyer to qualify for an FHA loan.
FHA loan requirements
FHA loans have both borrower and property requirements. Qualification is based on your complete financial profile and may include a review of your:
Credit history and credit score
Employment and income
Monthly debt obligations
Available funds for closing
Proposed property
Ability to repay the mortgage
The home must generally be used as your primary residence and meet FHA property standards. An FHA-approved appraisal is typically required to evaluate the home’s value and condition.
Meeting minimum program guidelines does not guarantee loan approval.
Understanding FHA Mortgage Insurance
FHA loans require mortgage insurance, which helps protect the lender if the borrower is unable to repay the loan.
Most FHA borrowers pay:
- An upfront mortgage insurance premium, which may generally be included in the loan amount
- An annual mortgage insurance premium, typically divided into monthly payments
The amount and duration of mortgage insurance will depend on factors such as the loan term, loan amount, and down payment.
Your FVSBank mortgage lender will show you how mortgage insurance affects your estimated monthly payment and overall loan cost.
FHA loans vs Conventional loans
Can gift funds be used?
Eligible gift funds may be used toward the down payment or closing costs when FHA requirements are met.
Gift funds may be available from an eligible family member or another approved source. Documentation will be required to verify where the funds came from and confirm that repayment is not expected.
Talk with your lender before transferring or depositing gift funds.
Temporary interest-rate buydowns
Temporary Interest-Rate Buydowns
A temporary buydown may reduce the effective interest rate – and therefore the initial monthly principal and interest payment – during the first one or more years of the mortgage.
Depending on program eligibility, buydown funds may be contributed by an approved third party, such as:
- the home seller
- a qualifying builder
- another eligible contributor
Temporary buydowns do not change the mortgage note rate. The borrower must qualify using the required interest rate under applicable underwriting guidelines.
Availability, contribution limits, and additional restrictions apply.
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FHA Loan FAQs
Is an FHA loan only for first-time homebuyers?
No. Both first-time and repeat homebuyers may qualify for FHA financing when program requirements are met.
What is the minimum FHA down payment?
The minimum down payment may be as low as 3.5% for qualified borrowers. Your required down payment will depend on your credit profile and other underwriting factors.
Can I use an FHA loan for an investment property?
FHA financing is generally intended for a borrower’s primary residence. It is not typically used to purchase a property solely for investment purposes.
Can I buy a duplex with an FHA loan?
Eligible FHA financing may be available for qualifying one- to four-unit properties when the borrower occupies one of the units as a primary residence. Additional requirements apply.
Does an FHA loan require an appraisal?
Yes. An FHA appraisal is generally required to confirm the home’s value and determine whether it meets applicable FHA property requirements.
Does an FHA appraisal replace a home inspection?
No. An appraisal is not the same as an independent home inspection. Buyers should consider hiring a qualified home inspector to evaluate the property’s condition.
Can the seller help pay closing costs?
Seller contributions toward eligible closing costs may be permitted within FHA program limits. Your lender can explain which costs may be covered and the maximum contribution allowed.
Can FHA mortgage insurance be removed?
The rules depend on the loan’s origination date, original loan-to-value ratio and other factors. For many FHA loans, mortgage insurance remains for the life of the loan unless the mortgage is paid off or refinanced. Your lender can explain the requirements for your specific loan.
Additional FVSBank Mortgage Solutions
Legal stuff:
FHA loans are insured by the Federal Housing Administration. FVSBank is not a government agency. All loans are subject to credit approval, underwriting requirements, property approval and program eligibility. Loan programs, terms, interest rates, mortgage insurance requirements and qualification guidelines are subject to change without notice. Minimum credit score requirements may vary by loan type, transaction, property and other factors. Additional restrictions may apply.