A Loan Designed for Home Ownership
Nearly 1 in 5 U.S. buyers uses an FHA loan to finance a home purchase. The Oklahoma loan limit when financing a single family residence using an FHA mortgage has been increased in 2022 to a generous $420,680.
The program’s popularity, in part, is because buyers can make downpayments of just 3.5 percent using the FHA mortgage program. But, there are other reasons why FHA loans are in demand, too. FHA loans are insured by the Federal Housing Administration, and with the government guarantee, lenders are more willing to lend with more lenient qualifying guidelines. FHA loans have been specifically designed to help borrowers get into homes.
In addition to flexible underwriting standards, FHA mortgage rates can be lower than comparable conventional rates; and FHA loans can be assumed by a home’s subsequent buyer. This is especially valuable in a rising mortgage rate environment.
First Time Buyers can often benefit from the guidelines of a FHA loan, including a lower down payment. Typical down payments can range between 10% – 20%, but with a FHA loan the down payment can be as low as 3.5%. This lower down payment can even be provided to you from a family member as a gift. FHA is aggressive with respect to gifts for downpayment. Very few loans programs will allow your entire downpayment for a home to come from a gift. FHA will. Your entire 3.5% downpayment can be a gift from parents or another relative, an employer, an approved charitable group, or a government homebuyer program. If you’re using a downpayment gift, though, you’ll need to follow the specific FHA gift fund process.
With more lenient qualifying guidelines, FHA loans make homeownership more accessible to more people. Credit scores as low as 580, higher debt to income ratios, and seller contributions are all allowed with a FHA loan. A few ups and downs in your credit history may be ok with the FHA.
- Lower down payments and gift funds allowed
- More flexible qualifying guidelines
- Competitive interest rates
- Available for purchase or refinance, fixed or adjustable rate
First Time Buyers are not the only ones who can benefit from a government guaranteed loan. You can refinance with an FHA loan, even if you don’t currently have an FHA loan. FHA loans come with a few requirements. Because the program intends to help buyers get into a home, you must live in it as your primary residence. (Don’t worry investors, we have plenty of other loan programs that are perfect for you.)
Some FHA programs will require you to have the home appraised by an FHA- approved appraiser, and for you to pay mortgage insurance premiums. Plan on paying Up Front Mortgage Insurance (UFMI) and a Monthly Mortgage Insurance Premium. Our Scissortail Financial expert loan advisors can tell you what you qualify for and what to expect for your total payments, including mortgage insurance.