FHA Home Loans
What Is An FHA Home Loan?
An FHA Home Loan is a flexible home loan offered by a participating lender like Bank of England Mortgage and is insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD).
What Are The Benefits?
Because the FHA insures the loan, Bank of England Mortgage can offer you financing with advantages like:
- A low down payment requirement.
- Seller can contribute up to 6% of closing costs.
- No debt-to-income ratio restrictions.
- Up to 96.5% financing*.
- A parent or relative can co-sign your loan as a non-occupant.
* FHA loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages. You will be able to finance the upfront mortgage insurance premium into your loan. You will also be responsible for paying an annual premium.
Am I An Eligible Borrower?
When you apply for your loan, the underwriter will consider your income, assets, liabilities and credit history. Having less than perfect credit is not a barrier to an FHA home loan. To be eligible for an FHA insured mortgage, you must also meet the following criteria:
- You must have a down payment of at least 3.5%.
- Your total monthly mortgage payment and other debt must not exceed 45-55% of your gross monthly income.
- You must have consistent employment for at least two consecutive years and verifiable income.
What Properties Are Eligible?
An FHA insured mortgage may be used to purchase or refinance:
- A family home with 1–4 units
- A condominium unit
- A manufactured housing unit (must be on a permanent foundation)
Bank of England Mortgage is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the Federal government. Guidelines subject to change.
What Are The Advantages For Homebuyers?
Thinking about buying your first home? Then an FHA loan may be just what you need. These mortgages benefit first-time homebuyers in that you can have a non-occupant like a parent or relative co-sign the loan for you. Your down payment can be as low as 3.5% of the purchase price, and closing costs and fees can be included in the loan.
Useful For Fixer Uppers
In addition to low upfront out of pocket requirements, the FHA also offers the 203(k) home loan. The program allows you to buy a home and finance qualifying improvements or repairs. It’s available in two forms:
- Streamline – Allows you to finance up to $35,000 in renovations, though only certain types of repairs are eligible.
- Standard – Allows you to finance a minimum of $5,000 in repairs with no maximum, though all repairs must be supported by the property appraisal. More extensive structural repairs are permitted with the Standard version of this program.