What’s an FHA Loan, and is it the right loan for you?
FHA Loans are a type of mortgage that is insured by the Federal Housing Administration. It is commonly used by home buyers who do not have capital for the conventional percentage of the purchase price as down payment. Here are a few frequently asked questions about FHA loans to help you decide whether it is right for you.
FHA was originally a program started in 1934 to help low-income families purchase homes. Is there a maximum income limit for a borrower who wants to use an FHA loan?
Answer: No, there is no income ceiling that prevents people from obtaining an FHA (or VA) loan.
Is there a maximum amount of money you can borrow on an FHA loan?
Answer: The maximum loan available in the Chicagoland area is $410,000, applied to an owner-occupied single-family or 2-flat. This amount varies around the United States according to average home prices.
What exactly is FHA, and how did it develop?
Answer: FHA stands for the Federal Housing Administration, which is part of HUD (U.S. Department of Housing and Urban Development). The government insures the loan, so the lender can offer the borrower a lower down payment (currently 3.5%) and closing costs.
What kind of credit score does a buyer need to obtain an FHA loan?
Answer: Minimum 620