New American Funding FHA Loans – 2019
New American Funding FHA Loans: Independent mortgage lender New American Funding uses a manual system of overwriting to determine qualifications for a mortgage loan, making it easier for many people to qualify. The company also works closely with potential homeowners to find the right loan for their needs. One of the options available is an FHA home loan.
FHA Loan Overview
FHA loans are insured by the Federal Housing Administration, so approved lenders like New American Funding can make financing available to buyers who might not be able to qualify for a conventional loan.
Once designed to allow buyers with damaged credit or no credit history to purchase homes, today’s government-insured FHA loan is available to a wider range of families and individuals. The FHA’s main goal is to make home ownership more affordable and realistic for buyers of all backgrounds.
Benefits of a FHA Loan
FHA loans have several advantages over conventional loans, primarily for first-time home buyers or those who have credit issues or foreclosures in their financial past.
- Low Down Payments. Traditional loans require a 20% down payment, but FHA loans allow you to make a down payment of as little as 3.5%. This allows people without a lot of savings to purchase a home.
- Gift Funds Allowed. Most loans don’t permit you to use a gift, such as from a family member, to make your down payment. FHA loans, however, let you make up to 100% of your down payment from gift funds.
- All Types of Properties Eligible. Even if you’re not buying a single-family detached home, you can qualify for an FHA loan. In addition to single-family dwellings, FHA loans cover 2- to 4-unit housing, condominiums and manufactured homes.
- Options for Loan Products. Several different terms for loans are possible with FHA backing. You can decide on a 30 year fixed, a 15 year fixed or a 203K loan.
- Simple Refinancing. FHA loans also allow you to refinance an existing mortgage loan, and their process is easy and without many of the challenges traditional loans pose. You can refinance with no income verification, no credit qualifying and no appraisal.
Requirements of a FHA Loan
With so many options for your FHA loan, requirements can vary based on the terms of the loan you choose. In most cases, you can get a mortgage loan with incomplete or damaged credit, but you must meet several criteria to qualify for the loan. Your lender can explain in greater detail what information you must provide for the loan that best matches your needs.
Here’s a basic run-down of the requirements you must meet for a FHA-insured loan.
- At least a 580 FICO score to get maximum financing and the best interest rate. You may still qualify for a loan with a lower credit rating.
- A minimum of a 3.5% down payment. Gifts and grants from friends and family members can be used for your down payment, but you must confirm that it does not have to be paid back.
- A housing ratio of 30%. This expense ratio identifies the percentage of your gross monthly income that you spend for housing.
- Your closing costs may be fully or partially paid by the seller, builder or lender.
- The property you are purchasing must be carefully inspected. Standards for home inspections may be higher than with a conventional loan.
FHA Loan Options
FHA Fixed Rate Mortgages
FHA 30 Year Fixed Rate Loan. Make a low down payment and spread out the loan payments over 30 years. Popular with first-time home buyers and those who want to minimize their monthly payments. There are no pre-payment penalties.
FHA 15 Year Fixed Rate Loan. Offers the benefits of the 30 year fixed loan with a shorter loan term. Build equity more quickly, pay less interest overall and pay off your house in a shorter period, if you can afford higher monthly payments.
FHA 203k 30 Year Fixed Rate Loan. This renovation loan lets you purchase a house that needs updates and fold in the cost of those improvements to your mortgage. You can also refinance the mortgage on your existing home so you can afford to remodel.
FHA Adjustable Rate Mortgages
FHA 5/1 Adjustable Rate Mortgage. Start with extremely low interest rates for the first 5 years of your loan, which is ideal if you plan to own your home for a shorter period or could refinance before the adjustable rate goes up. If you continue the loan after 5 years, the market will determine the interest rate you pay.
FHA Streamline Refinance Loans
FHA Streamline 30 Year Fixed Rate Refinance Loan. Refinance to get a lower interest rate and lower monthly payments or to convert an adjustable rate mortgage to a fixed rate. These streamline loans don’t require income documentation or an appraisal.
FHA 203k Streamline 30 Year Fixed Rate Refinance Loan. This renovation loan lets you refinance and take out an additional $35,000 to make updates to your house.
FHA Streamline 5/1 Adjustable Rate Refinance Loan. Receive a low interest rate for the first 5 years of the loan, then pay market interest rates. If you plan to stay in your house for less than 5 years, or are likely to make a higher income after 5 years, this can be a great option.
In addition to these options, New American Funding can offer an I CAN mortgage, which gives you the flexibility to choose your loan term. This is a great way to balance your monthly payment with the shortest possible mortgage term so you can pay less interest and pay off your loan as quickly as you can.
If you have other questions about whether a FHA loan through New American Funding is right for your circumstance, please talk to one of our mortgage specialists, either in a branch location, by phone or online.