FHA Home Loans

An FHA home loan is a special type of mortgage that's insured by the Federal Housing Administration, or FHA. It's designed to help borrowers purchase a home with a lower down payment or lower credit score than typically required.

Because FHA loans are backed by the government, they provide lenders with a loan guarantee. This makes it more likely that a lender will approve and close your FHA mortgage at a lower FHA loan interest rate and for less money down. FHA loans are perfect for first-time homebuyers.

An FHA mortgage is a type of home loan guaranteed by the Federal Housing Administration. This mortgage program helps first-time homebuyers and those with moderate income get approved for a mortgage. Buyers benefit from lower FHA loan interest rates, flexible credit requirements and lower down payments.

You may be eligible for an FHA loan if you meet the following requirements:

• Have steady work history and income
• Meet the minimum age requirements for your state
• Have a credit score above the lender's minimum requirements; the current minimum credit score is 620 for an FHA home loan at First Citizens
• Are a US citizen

For more information, find a mortgage banker, Opens in a new tab.

First, only FHA-approved lenders can offer this type of loan. Next, if you get an FHA home loan, you'll be required to purchase FHA mortgage insurance. This means you'll pay an upfront cost of 1.75% of the loan amount, as well as monthly mortgage insurance premiums, or MIPs. Depending on the terms of your loan, you may be making these payments for 11 years or for the life of the loan.

An FHA loan may be right for you if you:

• Are a first-time homebuyer
• Have some credit challenges
• Have a moderate yet stable income
• Have a steady work history
• Need down payment assistance
• Desire a lower down payment

No. Although FHA home loans are primarily used by first-time homebuyers, it's not a requirement of the program. In fact, you can qualify for this type of loan even if you've gone through a foreclosure, as long as you wait the required amount of time and can demonstrate good credit. The main thing to remember is that you can't purchase a vacation home or rental property with an FHA loan—rather, the house must be your primary residence.

To qualify for an FHA home loan, you'll need a down payment of 3.5% and a credit score of 620 or higher. The FHA gives lenders specific guidelines to determine eligibility, and your lender can help you understand how they apply to you. For example, you'll need to show a steady employment history for the past 2 years to qualify for an FHA home loan.

Take these steps to apply for an FHA home loan.

1. Find a mortgage banker, Opens in a new tab to assess your homebuying readiness and determine if an FHA loan is right for you.
2. Apply for the home loan online. Be sure to include any required documentation, such as proof of employment, proof of income and tax documents.
3. Respond to any requests from underwriting quickly.
4. Await loan approval.
5. Close on your FHA mortgage loan.

How soon you can refinance an FHA loan depends on the type of mortgage you desire. Options include streamlined, cash-out , simple and 203(k) refinance.

• FHA streamlined refinances require you to wait 210 days before you can refinance an FHA mortgage loan. Your mortgage must be current and have been paid on time for the last 6 months.
• FHA cash-out refinances require you to have owned your home for at least a year, made your payments on time for a year, have a 500 credit score and a low debt-to-income ratio.
• FHA simple refinances require you to have made on-time payments for the last 6 months.
• FHA 203(k) refinances require your home to be at least a year old and your payments for the last 6 months to have been made on time.

Yes. FHA home loans are assumable. The homebuyer assuming the loan must meet credit, income, employment and other FHA requirements.