FHA Purchase Loan

An FHA purchase loan is a popular financing option that makes homeownership more accessible, especially for first-time buyers or those with limited financial resources. Backed by the Federal Housing Administration (FHA), this loan program offers flexible credit requirements, low down payments, and a range of benefits that make purchasing a home achievable.

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Purchase
A purchase loan can be used to buy a home.


Refinance
A 'rate and term' refinance allows you to improve the terms of your existing mortgage by lowering the monthly payment. A 'cashout refinance' allows you to convert equity into cash.


Home Equity
A home equity loan or line of credit is a 2nd mortgage that allows you to convert equity to cash without having to touch your existing 1st mortgage.

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    KEY TAKEAWAYS

    • FHA purchase loans offer down payments as low as 3.5%, making homeownership accessible to more people.
    • The program is available to borrowers with credit scores as low as 580; in some cases, even those with a lower score can qualify if they’re able to put down a higher down payment.
    • Borrowers must meet specific FHA purchase loan guidelines to qualify, including property requirements and debt-to-income (DTI) limits.

    Whether you’re a first-time buyer or looking to buy a house with a low income, understanding the benefits and requirements of FHA loans can help you make a more informed decision that feels right for you.

    What Is an FHA Purchase Loan?

    At its foundation, an FHA purchase loan is a government-insured mortgage designed to help prospective buyers purchase homes with more flexible requirements than conventional loans. This loan purchase program is popular among first-time buyers, those with lower credit scores, and those with limited savings for a down payment.

    Unlike conventional loans, FHA loans are backed by the Federal Housing Administration (FHA), reducing the risk for lenders and allowing them to offer favorable terms to borrowers. These loans can be used to purchase single-family homes, multi-family homes (up to four units), and condos.

    Think you qualify for a loan? Contact us today to find out!

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    Benefits of FHA Home Purchase Loans

    The FHA home purchase loan program offers prospective home buyers a handful of advantages, especially for buyers who don’t meet conventional loan requirements. 

    Key benefits of this loan offering program include:

    • Low down payments: With just 3.5% required, FHA loans are ideal for buyers with limited savings or who need help putting down a sizable down payment.
    • Lenient credit requirements: Borrowers with credit scores as low as 580 can qualify for a 3.5% down payment and those with a credit score as low as 500 can qualify with a 10% down payment.
    • Competitive interest rates: FHA loans often feature relatively low interest rates, which can lower monthly payments and reduce the overall cost of borrowing.
    • Lower closing costs: Sellers and lenders can cover part of the closing costs, further reducing the upfront expense for buyers.
    • Assumable loan: FHA loans are assumable, which can make selling your home easier in the future, as it allows a qualifying buyer to assume your mortgage’s rate and terms. 
    • Streamlined refinancing options: The FHA program offers streamline refinancing and cash-out refinancing options in case you want to tap into your equity in the future.

    These features make FHA loans a practical choice for many buyers, especially those purchasing their first home.

    FHA Purchase Loan Requirements

    There are specific eligibility criteria that borrowers must meet in order to qualify for an FHA home purchase loan. These FHA purchase loan guidelines ensure that both the borrower and the property meet the program’s standards.

    Requirements of the FHA purchase loan requirements include:

    • Credit score: A minimum credit score of 580 is required for a 3.5% down payment. Borrowers with scores between 500 and 579 may still qualify with a 10% down payment.
    • Debt-to-income (DTI) ratio: The DTI ratio should typically be 43% or lower, though higher ratios may be approved with compensating factors.
    • Employment: A steady employment history or consistent income for at least two years is necessary.
    • FHA loan limits: Borrowers must adhere to loan limits that dictate an FHA loan’s max purchase price, which varies by county and property type.
    • Use for primary residence: FHA loans are only available for properties that will serve as the borrower’s primary residence.
    • Meet minimum property standards: The property must meet minimum safety and livability standards as determined by an FHA appraisal.

    These FHA loan purchase requirements ensure borrowers are financially prepared while protecting the lender’s investment.

    Get Pre-Approved for an FHA Purchase Loan

    Get pre-approved for an FHA purchase loan today when you reach out to Griffin Funding. Getting pre-approved for a loan not only confirms your eligibility but also gives you a clear understanding of your budget, helping you shop for homes confidently and with peace of mind.

    At Griffin Funding, we aim to simplify the approval process for FHA loans and make the process as smooth as possible. With tools like the Griffin Gold app, you can explore your options, track your application, and connect with our loan experts for personalized guidance.

    Contact us to learn more about FHA purchase loan guidelines or take the first step toward securing an FHA loan today!

    Begin the application online or request a free quote today!

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    Frequently Asked Questions

    While FHA loans are an excellent choice for many buyers, there are some potential drawbacks:

    • Mortgage Insurance Premiums (MIP): Borrowers are required to pay both upfront and annual Mortgage Insurance Premiums (MIP), which increases the overall cost of the loan. These premiums are mandatory regardless of your down payment amount and remain in place for the life of the loan unless refinanced into a conventional loan.
    • Primary residence only: FHA loans are only available for primary residences, meaning they can’t be used for vacation homes, second homes, or investment properties. However, it’s worth noting that if you do purchase a multi-unit property with an FHA loan, you can rent out other units as long as one unit remains your primary residence.
    • Loan limits: Borrowers are subject to FHA loan limits, which can vary by location. In high-cost living areas, an FHA loan’s max purchase price might restrict your ability to purchase more expensive properties, potentially requiring you to explore alternative financing options.

    No, it’s typically easier to qualify for an FHA loan than many conventional loans since the program’s lenient credit and down payment requirements make it accessible to borrowers who might not be eligible for other financing options.

    Yes! FHA loans can be used to purchase foreclosed properties, provided the home meets the program’s property standards. This makes them an excellent option for buyers looking for affordable opportunities in the housing market.