What You Need to Know about FHA Loans

By Reliant Home Funding, Inc

While the home buying process is all about finding the perfect place for you and your family to call home, it’s also a significant financial commitment. As such, you need to pay close attention to the type of loan you ultimately use to buy the home. While you’ll get invaluable advice and guidance from your Long Island mortgage company, knowing a thing or two about the mortgages available, specifically FHA loans, will help make things easier on you.

What’s an FHA Loan?

As your Long Island mortgage company will explain to you, an FHA loan is a mortgage insurance solution. It’s a program offered by the Federal Housing Administration, part of the federal government. Note that the FHA is not a lender – they simply insure the loans given to borrowers by lenders.

It’s also important to note that you can’t get an FHA loan from any and all lenders. The FHA only approves certain lenders. So, the first part of your legwork will be finding an FHA-authorized lender (your Long Island mortgage company can help reduce the amount of effort you spend here).

Why Might You Consider an FHA Loan?

What is it about FHA loans that makes them so attractive? It’s really all about the protection offered to the lender. Because the lender has less risk, they’re able to offer some important benefits to the borrower (you).

There are also a few other perks that make these important tools for home buyers. For instance, you’ll find that the interest rate is considerably lower than with a conventional mortgage loan, meaning that not only will your monthly payments be lower for the same amount as with a conventional home mortgage, but that you’ll actually pay less over the life of the loan.

Another benefit here is that FHA loans come with lower down payment requirements. Any money you can save when buying a home is a great thing, and a lower down payment means more money left over for other needs, like insurance, repainting, repairs and the like. What’s more is that these loans are available to buyers without sterling credit. In an age when more lenders than ever have put stringent requirements in place for borrowers that can bar many people from owning their own home, this is a ray of hope.

Finally, FHA loans can be assumed by others. Let’s say that you get an FHA loan and you buy the home. You spend quite a few happy years there, but then your employer offers you a very lucrative job on the other side of the country. That means you need to sell your home and move. With an FHA loan, a buyer can actually assume the loan directly rather than going through the lengthy process of getting their own loan.

It’s Not All Golden

While FHA loans are great for many reasons, there are a few potential issues you need to understand. The most important of these is that you are required to have mortgage insurance. Actually, you need two types. You’ll pay the first one upfront when you buy the home. The second is a monthly payment.

You’ll also find that FHA loans are only applicable toward certain types of properties. You can’t buy just any old house you want. You’re required to have the home appraised by an appraiser with FHA approval to ensure that it meets those requirements. If it does not meet requirements, the seller can agree to make the needed repairs or changes, but that is up to them – they’re not required to do so. The only other choice is for you to pay for the repairs at closing.

So, Who Qualifies for FHA Loans?

As you can see, there are quite a few things that you’ll love about being able to get an FHA loan through your Long Island mortgage company. But will you qualify for one? That’s where things get a little sticky.

In order to qualify, you’ll need to meet a few requirements. One of those is that the amount you pay monthly for the mortgage, plus all other home-associated costs (insurance, HOA fees, etc.) cannot exceed certain ratios.   You need to have a credit score of at least 500, and you must use the property as your primary residence (no vacation homes, second homes, or rentals).

There are other things you’ll need to consider before deciding that an FHA loan is the right fit for you, and your Long Island mortgage company can help. If you’re ready to consider buying a home, get in touch with Reliant Home Funding to discuss your options and learn what you’ll need to know to get through the process.


Gregory A. Topal

Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company.  Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)

Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.





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