The goal of The Federal Housing Administration (FHA) is to protect lenders and improve the housing market. By insuring home loans made by approved lenders, the FHA allows both lenders and buyers to benefit from FHA loan programs. Homebuyers can qualify with great rates and less than perfect credit while lenders are protected from borrower default. FHA loans are available not only for purchases, but for refinances, special renovation projects, and reverse mortgages as well. Mortgage Team 1, Inc offers some of the lowest rates available on FHA loans in Mobile and the surrounding Alabama areas.
Given their low down payment and credit score requirements, FHA loans have become one of the most popular home loans among first-time homebuyers. The minimum down payment requirement is 3.5% of the purchase price. If this can be made, a borrower could qualify with a credit score of only 580. Family members are even able to gift the down payment if the borrower does not have the cash on hand. There are no mortgage originating, processing, or underwriting fees with FHA loans either.
Mobile FHA Loan Requirements
- Credit Score – 580 or higher. Borrowers with scores between 500 and 579 may still be able to qualify with a larger down payment.
- Debt-to-Income Requirements – A debt-to-income (DTI) ratio of 43% or less is required. A DTI ratio of up to 50% may be approved in certain circumstances.
- Down Payment – 3.5% of the purchase price is the minimum down payment allowed with an FHA loan. A higher down payment may be needed depending on a borrower’s credit score.
- Property Requirements – Properties must meet certain safety, security, and soundness (structural integrity) requirements to be eligible for the program.
Maximum loan amounts can range from $271,000 up to $636,500 in high-cost areas. Loan limits are set for each county.
Mobile FHA Loan Limits
The benefits of the FHA loan program are made possible by mortgage insurance. Two different mortgage insurance premiums (MIP) are required with every FHA loan. An up-front premium of 1.75% of the purchase price will automatically be added to the balance of the loan by the FHA. The second premium is paid as part of your monthly mortgage payment. The monthly premium will fall between .45% and 1.05% of your annual mortgage balance. The exact rate is based on factors such as the total loan amount, your loan-to-value (LTV) ratio, and the length of the mortgage.
In addition to home purchase loans, the FHA offers refinancing options as well. Both streamline refinance and cash-out refinance options are available for homeowners who currently hold an FHA loan. The FHA also offers the FHA 203k for renovation projects which allow a borrower to combine the purchase of a home and the cost of renovations and repairs into a single mortgage.
Whether you are purchasing your first home in Mobile, or are a current homeowner interested in refinancing your current FHA loan, at Mortgage Team 1, we can assist you with all of your FHA loan needs. We have over 75 years of experience handling FHA loans throughout Alabama. Contact us today for more information on Mobile FHA loans or to begin the pre-qualification process!