FHA Loan

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What is a FHA Loan ?

FHA loan is a loan with guidelines established by the Federal Housing Administration and first introduced in 1934 by the Department of Housing and Urban Development and used to finance an owner-occupied property.

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FHA LOAN VIDEO

A quick video describing the
details of FHA Loan.

Key Benefits of a FHA Loan

FHA loan program asks for a down payment of only 3.5% of the sales price of the home, making it a popular choice for first time buyers due to the lower amount of cash needed at closing compared to a conventional loan, but is not restricted to first time home buyers.

Flexible requirements

Under 20% of down payments & Equity are also eligible

FHA Streamline Refinance Program: No Credit score / No Appraisal / No Income verification required*


All parties MUST remain on the note

Non-owner occupied borrowers allowed

All or part of the down payment and closing costs can be in the form of a financial gift

How does a FHA loan work?

FHA loan, like other government-backed programs, can be used to finance a primary residence only and cannot be used to finance a rental property. FHA loan carries a guarantee to the lender which makes qualifying easier.

Because of the government-backed guarantee to the lender, FHA loan carries less stringent qualification guidelines compared to other low down payment conventional loans and there are no income limits for FHA loan. FHA loan limits can vary county by county. Your loan officer can provide you with these limits and prequalify you over the phone.

ARMs also have interest rate caps, or simply “caps.” A cap is a consumer protection feature that limits how much a rate may change upon adjustment. The initial cap limits how much the rate can be after the hybrid period has elapsed. An annual cap limits how much the rate can change from year to year and a lifetime cap is how much the rate can change over the life of the loan. Different adjustable rate programs can have different caps.

FHA Streamline Refinance

FHA loan also provides another consumer benefit when a refinance is in order. When replacing FHA loan with a new FHA loan, it then qualifies for a “streamline refinance” status. A streamline refinance is one where very little documentation is required such as no income verification, no minimum credit score and no appraisal required. As long as the rate is being lowered or the borrowers are replacing an ARM with a fixed, it can qualify as a streamline refinance.

Frequently Asked Questions

  • Are there different loan terms available for FHA loan?
  • Yes, you can select from loan terms ranging from 15, 20, 25 and 30 years. VA loans also offer similar loan terms.

  • Is FHA loan my best choice if I have bad credit?
  • Probably but don’t be the one to prejudge your credit. Let one of our Majestic loan officers review your credit report and provide some solutions for you.

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