FHA Loans
FHA loans are an excellent option for first-time homebuyers, borrowers with lower credit scores, and those who cannot afford a large down payment. You’ll enjoy competitive mortgage rates, lenient credit score requirements, and smaller monthly payments than may be possible with a conventional mortgage.
At TrueWay Mortgage, we’re passionate about matching all borrowers with loan products that meet their needs. If you’re considering an FHA home loan, we’ll help you find a great mortgage lender and a competitive interest rate, then guide you through the loan application process.
We’ll even help you find down payment assistance programs that can reduce your upfront expenses.
What is an FHA Loan?
A Federal Housing Administration (FHA) loan is a government-backed mortgage, meaning that the federal government will reimburse private lenders for part of the loan amount if an FHA borrower defaults.
It is easier to qualify for an FHA mortgage than a conventional loan because the minimum credit score is only 500, much lower than other home loan programs. FHA borrowers with a 580 credit score only have to provide a 3.5% down payment, while those with scores between 500 and 579 must put 10% down.
While FHA loans are marketed toward first-time homeowners, they can help borrowers in many financial situations, including those with a poor financial history or who cannot afford the minimum down payment for conventional mortgages. TrueWay Mortgage will help you decide if FHA home loans meet your needs and match you with lenders providing loan terms you’ll love
The Federal Housing Administration backs FHA loans. This means the federal government will partially reimburse an FHA loan lender if a borrower defaults on their mortgage.
FHA loans help people with risky borrowing profiles who could not otherwise buy a primary residence. The maximum loan amounts are lower because FHA loans are usually provided to lower-income borrowers. In return, it’s easier to qualify, and you don’t have to offer a large down payment.
A loan officer from TrueWay Mortgage will guide you through the steps to qualify for an FHA loan, ensuring you have a stress-free FHA loan experience.
Benefits of Choosing an FHA Loan
FHA loans offer many advantages to low-income borrowers whose credit report would otherwise disqualify them from a mortgage. With a lower minimum down payment, more flexible credit score requirements, and no private mortgage insurance, an FHA mortgage can be an excellent choice for many buyers.
Our team will help you find the best rates on an FHA loan, saving you even more money over time. We ensure that you get the most competitive interest rate possible with your specific borrowing profile, which will significantly reduce your mortgage payment.
An FHA loan requires a much lower down payment than you could achieve with other loan products, which makes them ideal for first-time buyers just starting their careers.
At TrueWay Mortgage, we’re dedicated to helping you find the most favorable terms based on your credit score, saving you even more. We can also help you find assistance programs to cover your down payment and closing costs.
You can qualify for an FHA loan with a credit score of just 500, which would disqualify you from most other loan options. This makes them an excellent choice for those rebuilding their credit, such as after a foreclosure.
We have experience helping borrowers in many financial circumstances and will work with you to ensure you receive a great rate.
In many cases, FHA loans will help you achieve better rates than is possible with a conventional product, especially if you have a lower credit score.
TrueWay Mortgage will match you with competitive rates from top lenders, ensuring you pay as little as possible in interest over time.
FHA Loan Requirements
FHA loans are meant to purchase a primary residence. You can use an FHA loan for a multiple-unit property where you live and rent out part of the building, but you cannot use it for a home that is solely an investment property.
Additionally, you must pay FHA mortgage insurance premiums at close and throughout your loan. The upfront premium is 1.75% of the loan amount, while your annual premium will vary based on the loan size.
Credit Score Minimums
FHA loans require a credit score of at least 500. If your score is between 500 and 579, you must provide a 10% down payment; if your score is 580 or more, you only need 3.5% down.
The TrueWay Mortgage team can direct you to credit counseling agencies to get your finances in order, and we’ll also help you find down payment assistance programs that can cover the difference between your savings and your FHA loan requirements.
Employment and Income Requirements
FHA loans do not have set employment and income requirements, making them suitable for people in many situations. However, lenders want to see that you have a stable income and will be able to repay your FHA loan.
You can meet these requirements by providing bank statements, tax returns, and pay stubs, as you would when applying for other loan products. We will help you gather your documentation and ensure it meets your lender’s needs, reducing potential delays.
Debt-to-Income Ratio
Debt-to-income ratio (DTI) refers to how much of your monthly income goes to debt service, like credit card bills and student loans. Your DTI generally needs to be 43% or less for an FHA loan, though some lenders will accept higher.
We’ll help you calculate your DTI and ensure you meet the FHA loan thresholds before applying.
How to Apply for an FHA Loan?
A member of the TrueWay Mortgage team will guide you through every step of the FHA loan process, from pre-qualification to final approval and closing. We streamline the process to reduce delays, and we’ll proactively communicate with you if there are any issues with your application.
Initial Consultation with TrueWay Mortgage
TrueWay Mortgage offers a one-on-one, personalized approach. You’re not just another account number to us but a person with your own financial goals and dreams. As such, we’ll get to know you and your specific borrower profile to match you to the right FHA loan product.
We will explain your options and advise on which best meets your needs. Our team will also explain each step of the FHA loan application and answer all your questions to help you make a confident decision.
Pre-Qualification Process
As with conventional loans, getting pre-qualified for an FHA loan helps you know how much the lender may offer you. It is not the same as pre-approval, which is conditional approval for a specific loan amount; pre-qualification gives you a ballpark estimate but does not mean you’ll be given that amount.
We offer a quick and efficient pre-qualification process so you can start shopping faster and narrow down your potential home choices.
Submitting Documentation
We understand that the documentation lists for any loan can be overwhelming, so we help to expedite the process. Our team will provide clear instructions on what’s required, reducing the need to ask you for further documentation, and we will organize it on your behalf.
The documentation you need for an FHA loan includes:
- Social Security number
- Government identification, like a driver’s license
- All addresses you’ve lived at in the last two years
- All employment information for the last two years
- Two years of tax returns
- Two years of W2s
- Your previous two pay stubs
- Three months of bank statements for all accounts
- If self-employed, tax returns for the last two years
Some people will need additional documentation, such as those who receive child support or have undergone bankruptcy in the last three years. We’ll help ensure you have everything necessary before applying, helping streamline the process.
FHA Loan Options and Programs
You can choose from two types of purchase FHA loans depending on your specific needs and a streamlined refinance option. Generally, the FHA loan you receive depends on the condition of the house rather than your borrowing profile.
After our consultation, we will match you with the right product and ensure you have everything necessary to apply confidently.
203(b) FHA loans are the standard FHA mortgage product, suitable for first-time homebuyers and those needing more lenient credit score requirements. These are used for good-quality homes that won’t require extensive repairs.
If you choose a 203(b) FHA loan, we’ll help ensure you meet all the requirements, including the minimum credit score, down payment amount, and mortgage insurance premium requirements.
The 203(k) FHA loan is a combined rehab loan and mortgage used for homes older than 1 year that require renovations.
If you find a fixer-upper you love but don’t have the money to renovate it yourself, an FHA 203(k) loan could be perfect.
We’ll help you apply and ensure you meet all the requirements, including how to submit your repair plans.
The streamline refinance is easier to do, as it doesn’t require the extensive documentation of a traditional refinance, like an updated credit score.
You’ll enjoy a lower rate and can even refinance into a 15-year mortgage if you’d like to pay your house off faster.
We’ll simplify the refinancing process, ensuring you meet all requirements before applying.
Comparing FHA Loans to Other Mortgage Options
We aim to ensure you receive the perfect product for your loan needs, whether an FHA loan or a different one. During our consultation, we will explain all your options and which might suit you best to get the most value from your loan.
FHA Loans vs. Conventional Loans
Conventional loans have stricter borrowing requirements than FHA loans, including higher credit scores, larger down payments, and lower DTIs. However, you can borrow more; if you provide more down, you can eliminate mortgage insurance. If you’re a well-qualified borrower, we may suggest a conventional loan as the best choice for you.
The TrueWay Mortgage team can direct you to credit counseling agencies to get your finances in order, and we’ll also help you find down payment assistance programs that can cover the difference between your savings and your FHA loan requirements.
FHA Loans vs. VA Loans
Department of Veterans Affairs (VA) loans are meant for qualifying veterans. They do not require mortgage insurance and require no down payment. Veterans with full entitlements also don’t have borrowing limits.
If you’ve served our country, we can help you choose between these two government-backed loans so you can choose the best one for your needs.
FHA Loan Limits
The FHA loan program limits how much you can borrow. This limit is always 65% of the conforming loan limit in the specific county. An FHA-approved appraiser will determine your home’s value before the lender approves the loan, and you may be denied a loan if your home’s value is higher than the limit.
The maximum loan amount in most places is $498,257, but high-cost areas may have limits as high as $1,149,825. You can buy a home with a higher purchase price, but you can only borrow up to the loan limit in your county. When you work with us, we will explain the loan limit in your county so you can narrow your home search.
Why Choose TrueWay Mortgage for FHA Loans
We treat every client as an individual with a unique life story and dreams, and we are committed to ensuring that they get the best loan possible for their needs.
As an expert in Federal Housing Administration loans, we’ll ensure you fully understand each facet of this unique mortgage product, such as annual MIP payments, minimum qualifications, closing costs, and documentation.
We can also help you decide between an FHA product and a VA or conventional loan, ensuring you fully understand the loan terms and advantages.
Our team will help you every step of the way, such as organizing your bank statements and pay stubs for your application. If you ever have concerns, you can always contact us, and we’ll take the time to explain everything.
Our network of lenders ensures you get the most competitive rates, personalized to your unique needs.
Start Your FHA Loan Journey Today
If you’re ready to start your FHA home loan process, we can’t wait to help you achieve your Georgia dreams.
Contact us today for a free consultation about our mortgage products, or get a free quote to see how much you can afford.
