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What is it?

The FHA loan has helped grow homeownership rates in large cities and for minorities since it’s inception in 1934. It is designed for low-to-moderate income borrowers. Often this loan program is used by first time homebuyers or those who have not had an opportunity to build their credit or savings for down payment. While the FHA loan is commonly used by first time homebuyers, it is not strictly for first time buyers and can be used for any home purchase as long as the qualifications are met. It is important to note that this loan is only an option for a primary residence and won’t work for investment properties or second homes, like vacation homes.

Why is it different from other mortgages?

This loan is not funded by FHA but instead is funded by your mortgage lender and insured by Federal Housing Administration (FHA). In order to secure the guarantee of FHA, qualified borrowers are required to purchase mortgage insurance— and premium payments are made to FHA. So your mortgage lender takes on less of a risk since FHA will pay a claim if you default on the mortgage.

Give me all the details.

Gift funds are allowed in conjunction with this loan as long as they are accompanied by a gift letter and donor bank statement.

During the appraisal, all utilities must be turned on.

The appraiser will need to inspect the appliances and sump pump.

If the property is vacant for 30+ days then a water test is required. If you are seriously delinquent on your federal student loans or income taxes you may not qualify for an FHA loan.

You can find more information here.

Stockton Mortgage: Not affiliated or endorsed by the Dept. of HUD or any govt. agency. NMLS #8259

Qualifications apply. See representative for details. Subject to approval. Property insurance is required for all loans secured by property. Rates are subject to change daily. NMLS #8259.  May require you to take out private mortgage insurance, or PMI. Program conditions are subject to change without notice. Rate lock period is 30 days. The details listed are for informational purposes only. It is provided to assist you in determining an estimate of lender fees that may be present and an estimate of your proposed monthly mortgage payment. There are other costs you will incur, not associated with the lender fees. These costs are paid to third parties involved and are standard in all mortgage transactions, such as title/attorney costs, appraisal, taxes and escrows. You will receive an official Loan Estimate after applying, which will provide you with a detailed breakdown of all closing costs.