- The Federal Housing Administration (FHA) was created in 1934 with the purpose of improving the housing market. To achieve their goal, the FHA began insuring home loans offered by approved lenders. In doing so, lenders are protected from borrower default which allows them to offer great rates to buyers with less than perfect credit or low down payment availability. FHA loans are available for purchases, refinances, and even special renovation projects. 5 Star Financial Group offers great rates on FHA loans throughout Tampa, Riverview, Valrico, Wimauma, and nearby Florida areas.
FHA loans are often preferred among first-time homebuyers given their low down payment and relaxed credit requirements. It may be possible for a potential buyer to qualify with a credit score of 580 and a down payment of only 3.5%. The cash needed to meet the minimum down payment requirement can even be gifted from a family member.
FHA Loan Requirements
- Credit Score – A credit score of at least 580 is required. Larger down payments may allow a borrower to qualify with a lower score.
- Debt-to-Income Requirements – A debt-to-income (DTI) ratio of 43% or less is needed. A DTI ratio of up to 50% may be approved in special cases.
- Down Payment – A minimum of 3.5% of the purchase price.
- Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.
Government-backed mortgages are made possible by mortgage insurance. With FHA loans, two mortgage insurance premiums (MIP) are required with each home loan. There is an up-front premium of 1.75% of the purchase price that is added to your total mortgage amount at closing. An additional premium is due each month as part of your mortgage payment. This second premium will fall between .45% and 1.05% of your annual mortgage balance. Rates will vary based on factors such as total loan amount, length of the mortgage, and loan-to-value (LTV) ratio.
In addition to typical purchase loans, the FHA also offers refinances and special renovation project loans. If you already have an FHA loan, you can take advantage of both cash-out and streamline refinancing options. To protect borrowers, streamline refinancing is only available if the borrower will save money through the refinance process. The FHA 203k loan is a unique type of home loan available for renovation projects. This program allows a borrower to combine the purchase of a home and the cost of renovations and repairs into a single mortgage.
Whether you are looking to purchase your very first home in Tampa, or are a current homeowner looking into FHA refinancing options, 5 Star Financial Group offers great rates and terms on all FHA loans. Contact us today for more information on FHA loans through Tampa, Riverview, Valrico, Wimauma, and the surrounding Florida communities.