What is a FHA Loan?
In 1934, the Federal Housing Administration (FHA) was established to improve housing standards and to provide an adequate home financing system with mortgage insurance. FHA does not make home loans, it insures a loans. In the event of home buyer default, FHA pays the lender from the insurance fund.
Historically families that were not otherwise able to make large down payments of 30% of purchase price, were no longer excluded from the housing market. With the existence of FHA they could finally participate in the American dream of home ownership.
FHA MORTGAGE HIGHLIGHTS
Buy a house with as little as 3.5% down.
Ideal for the first-time homebuyers unable to make larger down payments.
The right mortgage solution for those who may not qualify for a conventional loan.
Down payment assistance programs can be added to a FHA Loan for additional down payment and/or closing cost savings. Check out our FHA products below.
BUYING A HUD HOME? We can close your HUD REOs in as fast as two weeks from submission while allowing hold-backs of up to $5,000 for escrow repairs.
SUPER Adjustible Rate Mortgages (ARMS)
Beacon Point's aggressive ARM pricing can provide a lower payment for your client.
3/1 and 5/1 Treasury ARMs available
Contact us to determine your best scenario.
Qualifies at note rate
Jumbo loans eligible.
SUPER LOW RATES.....
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The main difference between a FHA Loan and a Conventional Home Loan is that a FHA loan requires a lower down payment, and the credit qualifying criteria for a borrower is not as strict. This allows those without a credit history, or with minor credit problems to buy a home.
FHA is more forgiving when it comes to derogatory credit history., giving you opportunity to provide a reasonable explanation of any derogatory items,. Borrowers who have experienced a major credit event such as bankruptcy and have a shorter waiting period to become eligible for financing, generally 2 years from a bankruptcy discharge and 3 years from a foreclosure whereas conventional loans generally require more seasoning of credit events generally 4 years from a discharge and 7 years from a foreclosure. discharged 2- 3-years ago, can work around past credit problems. See our detailed chart here.
Conventional financing relies heavily upon credit scoring, a rating given by a credit bureau such as Experian, Trans-Union or Equifax. If your score falls below the minimum standard, your application would result in a decline.
FHA Loans vs. Conventional Home Loans
Mortgage Insurance although said to be cancelable seems to go on into perpetuity and based on some artificial actuarial timeline. Over a span of 30 years, this fact places the homeowner at a disadvantage in comparison to his neighbors equally situated but who has a conventional product.
An entire years worth of morgage premium is collected up front whereas conventional loans require only a few installment payments to be paid into an escrow account in order to initiate a private policy.
PMI is easily cancellable once 80% Ltv is reached and you can avoid PMI all together with a Beacon Point conventional product.
If its down payment you are looking to reduce, there exist other conventional programs in the market with as little as a 3% down payment requirement, like Home Ready. and Home Ready allows for some Community Approved Sources of down payment assistance.