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Mortgage Loans

FHA makes owning a home more affordable

Many home buyers have big misconceptions about down payments — perhaps you’ve heard a few. One of the biggest myths is that a 20 percent down payment is required; but the truth is, many people put down less than 5 percent, thanks to government-insured loans like an FHA mortgage.

If your clients aren’t familiar with FHA loans, now’s the time to get them on board.

This program makes homeownership more affordable and accessible. How so?

Competitive interest rates

For starters, interest rates on an FHA loan are sometimes lower in comparison to other mortgage programs. Another upside is that the program features higher loan limits in certain areas. Take Denver County, for example, where the loan limit is 500,000+.

Of course, the benefits and features of an FHA loan don’t stop there…

Low down payments

Home buyers can purchase a home with as little as 3.5% down. The difference between a 3.5% and a 5% down payment on a $300,000 property is roughly $4,500. That’s money your clients can keep in their pockets.

Gift funds allowed

Borrowers with smaller cash reserves can use gift funds (from an acceptable donor) for their down payment and/or closing costs, as long as we’re able to verify the source of these funds. As a bonus, the program even allows seller contributions up to 6%.

Easy credit requirements

FHA is an ideal program for clients with credit scores under 620. Keep in mind that borrowers with credit scores between 500 and 579 are allowed on an exception basis, and they will need a 10% down payment — higher than the program’s minimum, but still less than 20%.

Additionally, it’s possible for clients to get an FHA home loan with no credit score. In this case, non-traditional credit - rent, telephone bills, utility payments, tuition payments and non-payroll deductions for insurance – can be used to gauge credit worthiness.

Flexible debt-to-income ratios

FHA home loans are less restrictive with regards to debt-to-income ratio requirements. Borrowers can typically get approved with a debt-to-income ratio up to 43%, and the monthly house payment can be up to 31% of their gross monthly income. Plus, higher percentages may be allowed on a case-by-case basis. 

Let us help your clients become homeowners with a program that’s designed to make a mortgage more accessible.  We make dreams happen when we collaborate, proving once again that we’re better together.