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What is an FHA loan and

What are your advantages and


An FHA loan is a loan insured by the Federal Housing Administration "(Federal Housing Administration). The federal government insures the loans to banks approved by the FHA in order to reduce the risk of loss if one of the debtors breaches the loan payments.


The FHA was created in response to the eruption of foreclosures and defaults that occurred during the crisis of the 1930s. The purpose of the FHA is to provide the banks with adequate insurance and thus help stimulate the home market to make the loans accessible and affordable. Nowadays, FHA loans are very popular, especially for home buyers for the first time.


What are the advantages of FHA loans?


Generally, an FHA loan is one of the easiest types of mortgages to qualify for because it requires a low deposit of only 3.5% and it is not necessary for the person to have perfect credit. Buyers who can not pay an initial 20% deposit or who can not be approved by a private mortgage insurance should see if an FHA loan is the best option for their particular case.

Another advantage of an FHA loan is that it is affordable, which means that if you want to sell your house, the buyer can take the loan you have. People who have a low or bad credit, who have gone through a foreclosure can still qualify for an FHA loan.


What are the disadvantages of FHA mortgages?


Since FHA loans do not have strict standards of a conventional loan, it requires two types of insurance for the payment of the mortgage. One is paid in full in advance at the time of closing and the other is paid monthly along with the loan payment.

Upfront PMI mortgage insurance: with this insurance, buyers pay a premium of 1.75% of the value of the home loan regardless of their credit score.


MIP monthly mortgage insurance: This is a monthly charge that is calculated on your mortgage payment. This value is based on the loan value compared to the value of the property (Loan to Value LTV). This mortgage insurance will make your payment for the full term of the loan


Some of the FHA loan requirements are:

Must have a stable employment history or have worked in the same line of work for the last two years.

You must have a valid social security number, have a legal residence in the United States and be of legal age to sign a mortgage in your state of residence.

Make a deposit of 3.5% of the initial fee. The money can be received as a gift from a relative.

FHA loans are only available to people who will use the house as their primary residence. It is possible that, even if you already have an FHA loan, you can apply for a second loan, if you are thinking of moving away.

The payment of your mortgage plus property taxes, plus the mortgage insurance plus the, home insurance has to be less than 37 percent of your monthly gross income.

There are maximum limits for FHA loans and it varies depending on the prices of the area of ​​the property you want to buy.


How do I get an FHA loan?

Easy, just give us a call at 407 201-6738 and a licensed agent will contact you.

If you have any questions about the subject of this article, please contact us at 407 201-6738 or write to us at: nmelendez@tsmlending.com