An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Basically, the federal government insures loans for FHA-approved lenders to decrease their risk of loss if a borrower defaults on their mortgage payment. This type of loan is often a great choice for a first-time homebuyer.
An FHA loan has more relaxed guidelines in comparison to other types of loans, as it requires a low down payment and borrowers can have less than perfect credit. An FHA down payment can be as little as 3.5%. Because the requirements are not as strict as, say a conventional loan, additional insurance is required.
The two types of mortgage insurance required for an FHA loan is an upfront mortgage insurance premium (UFMIP) paid at loan closing, and the other is an annual MIP, that is paid monthly as part of the loan payment.
There are maximum mortgage limits for FHA loans that vary by state and county.
Skyline Home Loans is an FHA-approved lender but is not affiliated with the FHA or the federal government. Each is solely responsible for the products and services it offers.