Federal Housing Administration (FHA) mortgages are insured by the FHA and they offer more flexible down payment and underwriting guidelines. They are not just for first time homebuyers, but are available for all borrowers who qualify – for both purchases and refinances. Below are some key aspects of FHA financing.
- Minimum down payment is 3.5% for all property types
- An impound account (see JVM Buyer’s Guide) is always required
- Both an up-front mortgage insurance premium and a monthly mortgage insurance payment are always required. The up-front mortgage insurance premium is typically financed into the loan amount.
- The down payment can be entirely from gift funds
- Lower interest rates than conforming loans
- Can only purchase as a primary residence
- Condos must be FHA-approved