FHA insured loans can be an extremely powerful resource. Unlike conventional loan underwriting, the central basis of an FHA loan is “common sense” underwriting. While conventional loans rely almost exclusively on historical statistics to project whether or not a borrower is a high risk, FHA recognizes that each borrower is an individual with unique situations and circumstances.
A central premise of effective FHA underwriting is to review each file on a case-by-case basis to determine if there are reasonable explanations for a borrower’s current situation. Instead of painting everyone with the same brush, FHA seeks to uncover what is distinctive about a borrower that will allow for a legitimate reason for granting the mortgage loan.
Benefits of an FHA loan include:
Easier to qualify.
Less than perfect credit will not automatically exclude you from consideration.
Low downpayment which can be gifted to you.
Costs less.
Low interest rate.
Closing costs comparable – and sometimes lower - than other financing types.
No private mortgage insurance requirement.
Right to prepay loan without penalties.
An FHA loan can be used to refinance a home, buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and FHA.
FHA Loans