Since the New Deal in the 1930’s, over 40 million FHA loans have occurred in the United State. As one of the most popular real estate loan options in the country, many do not understand how these loans work and their benefits. Learning more about these loans and how they benefit you as the buyer can help make your dream of owning Florida Keys real estate a reality. Learn more about FHA loans here!
What are FHA Loans?
An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Nowadays, FHA loans are very popular, especially with first-time home buyers because the requirements are less strict than conventional loans. Qualifying borrowers are able to enter smaller down payments that make buying attractive to a wide variety of potential buyers, like first-time home buyers. Buyers with lower credit scores are also able to qualify for attractive loans, while other loans like conventional loans may be denied.
Reap the Benefits of Interest Rates
Annual MIP (charged monthly) — Called an annual premium, this is actually a monthly charge that will be figured into your mortgage payment. The amount of the mortgage insurance premium is a percentage of the loan amount, based on the borrower’s loan-to-value (LTV) ratio, loan size, and length of loan:
|Loan Term||Loan Amount||LTV Ratio||Annual Insurance Premium|
|Over 15 years||$625,000 or less||95% or less||0.80%|
|Over 15 years||$625,000 or less||Over 95%||0.85%|
|Over 15 years||Over $625,000||95% or less||1%|
|Over 15 years||Over $625,000||Over 95%
|15 years or less||$625,000 or less||95% or less||0.45%|
|15 years or less||$625,000 or less||Over 95%||0.70%|
|15 years or less||Over $625,000||95% or less||0.70%|
|15 years or less||Over $625,000||Over 95%||0.95%|