What Is an FHA Loan?

FHA loans are mortgages for primary residences insured by the Federal Housing Administration (FHA) as part of the US Department of Housing and Urban Development (HUD). The primary goal of the FHA loan is to make homeownership more accessible by providing insurance to private lenders against defaults on the loans they issue. 

This encourages lenders to offer more lenient loan terms and qualification criteria than they might for conventional mortgages.

FHA Loan Requirements in NC

FHA loan requirements in NC can vary from lender to lender, but the basic criteria the FHA sets apply nationally. Here are the general NC FHA loan requirements: 

  • Credit score: Borrowers need a minimum credit score of 550 to qualify for an FHA loan through Griffin Funding. Those with higher scores can get better interest rates and lower down payment requirements. 
  • Down payment: With an FHA loan in NC, you can secure financing with a down payment as low as 3.5%. Note that your down payment requirement may be higher if you have a low credit score.  
  • Debt-to-income (DTI) ratio: Generally, your DTI should be around 43% or lower, but in some cases lenders might allow a higher DTI ratio if there are compensating factors. 
  • Steady employment history: Lenders typically like to see consistent employment for at least the last two years. However, lender requirements vary. 
  • Property requirements: The FHA sets property requirements. In general, the home being purchased must be the borrower’s primary residence. Additionally, it must meet certain minimum standards for safety and habitability. An FHA appraiser will come to the home to determine its fair market value. 
  • Mortgage insurance: Borrowers are required to pay an upfront and annual mortgage insurance premium (MIP). 

Benefits of FHA Loans in NC

FHA loans offer several benefits, and while many of these advantages apply nationwide, they can be particularly appealing for potential homeowners in North Carolina due to the state’s diverse real estate offerings, from urban centers to rural areas. Here are a few of the benefits of FHA loans in NC: 

  • Lower down payment: FHA loans in NC offer the ability to make a down payment as low as 3.5% for those with a qualifying credit score. This makes homeownership more attainable for those who don’t have a large savings set aside. Of course, comparing FHA loans to other government-backed programs like VA and USDA loans, you might find other options more suited to your unique situation. For instance, you might compare FHA vs. VA loans if you’re a veteran or active duty service member 
  • Flexible credit requirements: Lenders typically like to see a credit score of at least 620 for conventional loans. Conversely, FHA loans only require a credit score of 550 for you to qualify. 
  • Higher DTIs: FHA loans can sometimes accommodate borrowers with higher debt-to-income ratios than other traditional mortgages, providing more flexibility in terms of qualifying. 
  • Assumability: FHA loans are assumable, meaning a future buyer can take over your loan at the same interest rate. This can be an attractive selling point if interest rates have risen since you purchased the home. 
  • Refinance: FHA offers flexible refinance programs for both cash-out and streamline.
  • State-specific assistance: North Carolina occasionally offers programs or incentives that can be paired with FHA loans. For instance, the North Carolina Housing Finance Agency (NCHFA) has been known to offer down payment assistance programs that can be combined with FHA loans for even more financial support. 

Apply for an FHA Loan in North Carolina

Embrace your homeownership opportunities in the Tar Heel State with FHA loans and their unique benefits. Griffin Funding simplifies your journey to homeownership with flexible credit requirements, lower down payments, and competitive interest rates. Don’t let financial barriers keep you from your dream. Choose Griffin Funding and unlock the door to a brighter future in a home you love. Apply for a mortgage online today

Frequently Asked Questions

What are the FHA loan limits in North Carolina?

FHA loan limits in North Carolina — the maximum amount you can borrow with an FHA loan – reflect the diverse real estate landscape of the state, accommodating its more standard markets and high-cost vacation locales. 

For most counties, the FHA loan limit in NC for a single-family home in 2024 is set at $498,257. But, recognizing the increased property values in certain areas, the FHA adjusts its limits accordingly. In high-cost areas, the limit for a single-family home significantly increases, reaching a ceiling of $690,000. 

What is the difference between a conventional loan and an FHA loan?

Both conventional and FHA loans are designed to finance the purchase of a home. However, they stem from different origins, and each carries its own set of qualifications and terms, which can make one more suitable than the other based on an individual’s preferences. 

One of the primary differences is that conventional loans are offered by private lenders without any government insurance. Lenders don’t have protection without this backing, so they have more stringent requirements because there’s no guarantee they’ll get their money back if a borrower defaults. 

FHA loans are also more accessible for those with lower credit scores or a smaller down payment. Conventional loans can require a higher credit score, often 620, and a larger down payment, commonly starting at 5% or more. However, while FHA loans mandate mortgage insurance regardless of the down payment amount, conventional loans only require private mortgage insurance (PMI) if the down payment is less than 20%. 

Wondering which home loan option is right for you? Download the Griffin Gold app for more information on home financing options and access to tools geared towards building financial stability. 

How do I apply for an FHA loan in NC?

As one of North Carolina’s premier FHA loan providers, Griffin Funding takes pride in our seamless, streamlined process. This efficiency doesn’t come at the cost of a personal touch. Every applicant is treated with utmost priority, ensuring all their needs are addressed. 

Beyond lending, we understand the importance of homeownership and work diligently to make your dreams a reality. By choosing Griffin Funding, you’re gaining a dedicated partner committed to making your home-buying experience smooth, efficient, and memorable. You can apply for an FHA loan in North Carolina online today or contact us to learn more and start the process over the phone.