The Federal Housing Administration (FHA) is the largest mortgage insurer in the world, insuring both single- and multi-family and manufactured homes. Roughly 30 percent of home loans are FHA mortgages. We do a lot of FHA loans here in North Carolina. Most often, the FHA mortgage appeals to
- First-time home buyers.
- Clients with credit scores between 580 and 620.
- Clients who want to make a low down payment.
You can qualify more easily for an FHA loan, because FHA guarantees the loan for the lender by issuing mortgage insurance. If you put down 3.5 percent of the purchase price of the home, it is NOT POSSIBLE for you to get the monthly mortgage insurance removed from your loan, unless, of course, you refinance. So please do not be misled!
First-time home buyers may use the FHA mortgage option to secure their first home, improve their credit score, and build equity in a home. Then the home buyer should consider refinancing in the future with a conventional mortgage with a better credit score and a similar or lower rate without mortgage insurance.
It is interesting to note the FHA is the only government agency self-funded through the homeowners it insures. It costs the taxpayer nothing! And, the FHA has been around since 1934.
How the FHA Mortgage Insurance Affects Your Monthly Payment
On a $200,000 home with 3.5 percent down, FHA would charge an upfront insurance premium of 1.75 percent, or $3,377 financed into the loan. In addition, the monthly mortgage insurance would add $201 to the monthly mortgage payment. In contrast, if you qualify for a conventional loan with 5 percent down, the private mortgage insurance would not charge an upfront fee and the monthly premium would be about $175, depending on credit scores.
FHA Loan Limits
FHA limits the amount of money you can borrow for a home in each of North Carolina’s counties. The limits range from a current low of $271.050 to a high of over $600,000 with the average being closer to $280,000. Keep in mind that you can buy a house for less but no more than the limit.
Hint: If you qualify, a conventional mortgage will typically be a better mortgage option than FHA. There are pluses and minuses to an FHA loan, so it is important to talk to a loan officer that you can trust. Read further by visiting the FHA website,
Will I Qualify?
If you are a first-time home buyer or have a credit score of 620 or above, your best option is to work with an experienced loan officer you can trust to guide you. We don’t automatically encourage a borrower to obtain an FHA loan. It is almost always better to get a conventional mortgage if you qualify. If you are not sure if you will qualify, we have expert loan officers who have worked with FHA loans for many years. They are anxious to help you improve your credit and find your first home.
FHA Loan Types
Choose from several FHA mortgage programs:
FHA LOAN: 5-YEAR ADJUSTABLE RATE
The FHA adjustable rate mortgage is specifically designed for low and moderate-income families who are trying to make the transition into home ownership. The 5-year ARM starts with a lower interest rate, and that rate will not change until the end of five years. This mortgage generally comes with an interest rate that is about 1 percent lower than the interest rate on a 30-year fixed rate FHA mortgage.
FHA LOAN: FIXED RATE
An FHA loan benefits those who would like to purchase a home but haven’t been able to put money away for the purchase, like recent college graduates, newlyweds, or people who are still trying to complete their education.
FHA LOAN: CONDOMINIUM UNIT
There are FHA loans specifically for those purchasing a unit in a condominium unit.
Why Work With Us?
Carolina Home Mortgage is local and an independent small business. You’ll find our rates are low if you do the comparison. For 15 years we have helped clients become our neighbors. You don’t get to do that unless you offer quality and client-centered service.
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or call us. At the end of the day, we report to you, not the bank! We are available after hours and weekends, too.