The Federal Housing Administration (FHA) was developed as part of the National Housing Act of 1934 with the goal of improving the housing market. In order to achieve this goal, the FHA insures home loans offered by approved lenders. By insuring home loans, lenders are protected from borrower default and can offer great rates to buyers with less than perfect credit or low down payment availability. The FHA offers loan options for purchases, refinances, and even special renovation projects. Rick Bernstein of Assured Mortgage Inc. offers some of the best rates on FHA loans throughout Brookfield and neighboring Wisconsin areas.
FHA loans are popular among first-time homebuyers in Wisconsin given their low down payment and relaxed credit requirements. First-time homebuyers can potentially qualify with a credit score of 580 and a down payment of only 3.5%. The down payment can even be gifted from a family member if the buyer doesn’t have cash on hand. Loan limits vary by county and can range from $294,515 up to $679,650 in high-cost areas.
Brookfield FHA Loan Requirements
- Credit Score – A minimum credit score of 580. Lower scores may be approved with larger down payments.
- Debt-to-Income Requirements – A debt-to-income (DTI) ratio of 43% or less. A DTI ratio of up to 50% may be approved in special cases.
- Down Payment – 3.5% of the purchase price if credit requirements are met.
- Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.
FHA loan programs are made possible through mortgage insurance. With each FHA loan, two mortgage insurance premiums (MIP) are paid. The first is an up-front premium of 1.75% of the purchase price that is added to your total mortgage amount at closing. The second premium is paid monthly as part of your mortgage payment. This premium will fall between .45% and 1.05% of your annual mortgage balance. The rate will vary for each individual and will depend on factors such as total loan amount, length of the mortgage, and loan-to-value (LTV) ratio.
Current FHA loan holders can also take advantage of cash-out refinance and streamline refinance programs. As an additional layer of protection for borrowers and lenders, streamline refinancing is only available if the borrower will save money through the refinance. Borrowers who want to purchase a home while making renovations at the same time will find the FHA 203k loan to be a valuable option. This unique type of home loan allows a borrower to combine the purchase of a home and the cost of renovations and repairs into a single mortgage.
Whether you are looking to purchase your very first home in Brookfield, or are a current homeowner looking into FHA refinancing options, Rick Bernstein of Assured Mortgage Inc. offers great rates and terms on all FHA loans. Contact us today for more information on Brookfield FHA loans, or to begin the pre-qualification process!