Murfreesboro FHA Loan Common Questions

FHA Loan Common Questions

Below are some frequently asked questions and answers about FHA loans:


Is down payment assistance available for FHA loans?
Most down payment assistance programs are eligible to use with an FHA loan.  The types of down payment assistance programs that are available depend on the location.  A mortgage lender can help you determine if you are eligible for any down payment assistance programs.  To have a mortgage lender help you check your eligibility for down payment assistance, request to be contacted by a lender.


Are there any mortgage programs that offer lower down payment options?
There are two different mortgage programs that offer 100% financing (which means that no down payment is required).  This includes VA loans and USDA loans.  VA loans are exclusively available for veterans, and USDA loans are available to finance rural properties (they are not available to finance homes located in cities or large towns).


What are “compensating factors” for an FHA loan
The FHA allows for a certain degree of leniency when it comes to what can be approved. When an applicant for an FHA loan falls a little bit short on certain requirements, but is strong in other areas, they still may get approved. Specific compensating factors are higher credit, long employment history, more in savings, or assets. Any one or more of these can help you get approved if you do not match up on other certain requirements.


How do I get pre-approved for an FHA loan?
If you qualify for an FHA loan, it is easy to get pre-approved.  An FHA mortgage lender can help you quickly see if you are eligible for an FHA loan.  To have an FHA lender contact you, please request to get matched with a lender.


Are cosigners allowed for FHA loans?
Yes, cosigners and co-borrowers are allowed on FHA loans. You also can have a joint applicant who is not your spouse or relative.


What are the pros and cons of FHA loans?
The main “pros” of FHA loans are: the low down payment option, they are easier to qualify for than conventional loans, the fact they are assumable and the refinancing options. The “cons” would be the costly mortgage insurance premiums, that they are not available for investment properties, and some may find loan limits in certain areas to be too low (FHA loan limits are often lower than conforming loan limits).


What are the options to refinance an FHA loan?
FHA loans offer two different options for refinancing.  This includes the FHA streamline refinance, which allows you to refinance your mortgage efficiently in order to reduce your interest rate and monthly payment.  This program does not require a new appraisal, credit check, or income documentation.   The other option is the FHA cash out refinance, which allows you to take equity out of your property.