FHA Loan Types

The FHA provides many different kinds of loans, not just purchase loans for those who are looking to buy a home. Whether you are trying to buy, refinance, or fix up your home, the FHA has different home loan options that are specifically suited to fit your needs. So if you thought that FHA loans were only available for first-time home buyers, you might be surprised at the variety of FHA loans available.

Of course, traditional FHA loans are for the first-time homebuyer. Those who are looking to buy their first home can receive up to 96.5% financing, a 3.5% minimum down payment is required. Homebuyers are permitted to finance the required fee for mortgage insurance with the loan and pay it off over the life of the mortgage. Traditional FHA loans of this nature are available on single unit homes, or buildings with up to 4 units.

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For those who currently own a home and are planning on making some improvements, the FHA offers guaranteed loans that work the same as an FHA mortgage. The homeowner must put at least 3.5% down, and the loan is generally extended 10-15% over the estimated amount to ensure there are enough funds to cover any unexpected costs.

Finally, the FHA offers various refinance options for homeowners who purchased their homes several years ago and may be paying a higher interest rate than is normal in the current economy. This kind of loan refinances your current lending option and allows you to save money over the life of your loan. There are no down payments required, but there may be a few closing costs or additional fees that can be financed throughout the life of your loan.

FHA loans are only for people who are planning on living in their home for a minimum amount of time and cannot be used by people who flip homes or who are planning on buying just to rent the home out. There are FHA loans available for this purpose, called an FHA 203(k) loan, and can be obtained through a number of different lenders. Shop around to see who can offer you the best rate.

If you are considering buying, fixing up or refinancing your home, consider an FHA loan. With historically low interest rates and easy financing available, you will be hard pressed to find a reason not to achieve your individual home ownership goals.