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FHA Home Loans in Salem

The Federal Housing Authority is a government agency created by congress in 1934 as a means of providing better housing to more Americans. At the time of its inception, only four out of ten families owned a home. Because the FHA has assisted so many in obtaining mortgages, today that number has surpassed sixty-eight percent. So what exactly is a FHA home loan and who qualifies?

Call American Brokerage at 800-874-8760 or apply on line with our quick, secure application and get an answer on your FHA Home Loan in Salem the same day!

FHA Home Loans Defined for Salem

FHA home loans are mortgages that are insured by the Federal Housing Authority. This type of insurance is set up to protect FHA approved lenders from the losses that occur when a borrower defaults on the loan. The cost of this insurance is placed upon the borrower and is usually calculated within the monthly payments of the loan.

Who Qualifies for an FHA Home Loan in Salem

Since this type of insurance adds to the monthly payment of a mortgage and seemingly benefits the mortgage lender, why would benefit from this type of loan? This loan allows borrowers who may not qualify for a traditional mortgage to have the opportunity to become homeowners. With an FHA home loan, the criteria considered for the mortgage is calculated on a more flexible scale. For instance, the ratio between income and loan payment amount is not as firm. Anyone who has been denied a traditional mortgage may wish to apply with a lender that offers FHA home loans.

Benefits

Allows a home purchase two years after bankruptcy
Allows a home purchase three years after foreclosure
Higher debt to income ratios
In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.
Available to borrowers with a lack of credit history or bad credit history
Down payment can be as little as 3% of your loan
Housing expenses and debt can be up to 41% of income versus the 33% estimate of a conventional mortgage

FHA Drawbacks

Typically the insurance provided by the FHA is more costly than other types of mortgage insurance.
There is a maximum limit to the amount you may borrow depending upon where the property is located.
Must have one year of acceptable credit
Requires 1.5% upfront mortgage payment (usually included in the loan)
Requires .5% annual premium which raises the monthly payment

Though an FHA home loan is more flexible, it does not mean that everyone will qualify or even wish to qualify. You should assess your lifestyle carefully before considering placing yourself in a loan that allows a closer debt to income ratio. The payments will be higher due to the insurance placed on the loan, and the payment will be a larger portion of your net income than allowed in a traditional loan. This means less cash flow will be available.

For more information visit the official Federal Housing Authority site.

Call American Brokerage at 800-874-8760 or apply on line with our quick, secure application and get an answer on your FHA Home Loan in Salem the same day!

Other Cities in Oregon we provide services.

Portland FHA Loans
Eugene FHA Loans
Salem FHA Loans
Gresham FHA Loans
Beaverton FHA Loans
Hillsboro FHA Loans
Medford FHA Loans
Springfield FHA Loans
Bend FHA Loans
Corvallis FHA Loans