The (FHA) Federal Housing Administration provides exceptional options for those looking to buy a home. One of these options is a 30 year fixed home loan. The leniency and flexibility with these types of loans enable homebuyers to follow a smoother process since they are backed by a government entity versus being backed by a private lender or a bank with more strict requirements. For those who are buying their very first home, those who have chosen to refinance, or even buyers looking to upsize their current living conditions for more space, FHA 30 year fixed loans can be more than ideal.

What are some of the major and significant benefits of an FHA 30 year fixed home loan?

• Your interest rate never changes due to it being a fixed rate. It never fluctuates despite any changes in the economy or the market. This option gives you 30 years of predictable monthly payments which can make planning your finances a bit less complicated.

• Lower down payment requirements (minimum of 3.5%) can help you to keep more money in your pocket or bank

• Lower credit requirements when compared to most conventional loans

• No penalty for prepayment or early payoff

• Lower closing costs

Although there are many major benefits when choosing an FHA 30 year fixed-rate mortgage, there are a few other items to consider when weighing your options. When comparing this option to a 15 year option, your monthly payment may be significantly lower. For a quicker payoff, a 15 year fixed note would be another viable option. 

When considering an FHA loan, rates can be an important factor. These types of loans may have higher interest rates when compared to other mortgage options such as a conventional mortgage. With higher interest rates, this will mean a higher monthly payment which can leave less money for additional expenses such as moving companies, down payment, and other move-in expenses. Even with a higher interest rate initially, having a 30 year mortgage can leave your monthly payments significantly lower when in comparison to a 15 year mortgage. 

Another great benefit is closing costs can actually be rolled into your loan. This can present significant savings initially if a home buyer does not have significant funds up front or has their money tied up in other important expenses associated with the home buying process. Closing costs generally vary by state.

What are the general qualifications for an FHA 30 year fixed rate mortgage? One of the first qualifying factors for this loan option is a credit score of 500 or more. Generally FHA loans are ideal for home buyers with less than perfect credit so their credit score requirements are more lenient in comparison. The next requirement is a down payment in the amount of 3.5 percent. Compared to other loan options, FHA loans generally require far less than other loan options. With a higher credit score or higher down payment, you may qualify for a lower interest rate. 

Another requirement for an FHA 30 year fixed rate mortgage is mortgage insurance premiums. There are two ways to pay for the (MIP) Mortgage Insurance Premiums. One way is to pay upfront fees at closing or you can pay annually over the course of the loan payments. When configuring the annual premium option, these items are considered: the amount of your loan, the term of your loan, and the amount of your down payment.

When deciding if the FHA 30 year fixed rate mortgage is for you, there is much to consider when making this meaningful decision for you or for your family. If you want to find the loan that’s right for you, give us a call today to speak to one of our highly qualified loan officers today! Let’s get you into the home you deserve!