Principle Home Mortgage offers FHA home loans in State College, PA and the Centre County region in addition to other great mortgage loan products, from VA to conventional. FHA (Federal Housing Administration) home loans are a wonderful product for many types of buyers, but particularly those looking to purchase a home with a low down payment. Borrowers looking to reduce their upfront costs of obtaining a mortgage will enjoy the FHA’s seller concessions, minimum down payment, and interest rates. This loan product does have some limitations, but fewer in comparison to USDA or VA loans. An FHA loan is available in forward purchases, renovations, and refinances.
- Seller Assist: Up to 6%
- Agency: Federal Housing Administration
- Max Loan-to-Value On Purchase Transactions: 96.5%
- Max Loan Amount: Depends on the subject property’s location (see link for map below)
- Mortgage Insurance Premium: Varies, but starts at 0.85% of the loan amount with minimum required down payment; continues for the life of the loan if less than 10% provided as a down payment
- Upfront Mortgage Insurance Premium: Required 1.75% of the loan amount; can be financed
- Max Income: No restrictions
- DTI Requirement: 43% but varies by lending bank and can be much higher with an automated underwriting approval. (see link below for more information on automated underwriting)
- Credit Requirement: Varies by lending bank and can be lower with an automated underwriting approval.
- Down Payment Requirement: As little as 3.5%
- The FHA backs your home loan: Unlike other mortgage products, an FHA home loan is guaranteed by the Federal Housing Administration. This guarantee is extended to the private lender in the case of foreclosure, allowing the lender to recover most or all of their investment, resulting in less risk to the lender. For the borrower, this can result in a better likelihood of obtaining the loan under better terms than other loan programs.
- Low required down payment: FHA home loans require a low minimum down payment of 3.5% of the sales price. If the appraised value is less than the contracted sales price, the borrower will be required to pay the difference plus the down payment. Remember there is a difference between closing costs and down payment.
- Lower credit score requirement: When comparing an FHA loan to USDA/Rural Housing home loans or conventional loans, borrowers with lower credit scores can have an easier approval process.
- Better interest rates than conventional loans at lower credit scores: FHA interest rates are typically lower than interest rates for conventional loans when comparing at the same credit score and down payment scenario.
HOW DO I APPLY?
Seeking an FHA loan is easy if you’re prepared with the right documentation! You will need 2 years tax returns & W2s, 2 months bank statements, 2 forms of ID, and 30 days of pay stubs. If you are self-employed, these requirements will vary slightly. While various guidelines are set by FHA, some lending banks will allow their applicants to go outside of those guidelines with additional requirements. To determine your eligibility for a low down payment FHA home loan in State College, PA and the Centre County region, reach out to Principle Home Mortgage at (814) 308-0959 to discuss your home financing needs.