What exactly is a FHA loan?

Long story short, I've had shitty credit for a long time now from dumb mistakes when I was younger. Now that I have a wife and daughter, and one on the day, I realized it was time to straighten shit out, because we want to buy a home.

I hired lexington law a few months back, and they actually have helped so far with my credit score. And while I don't know exactly what my credit score is, I know it's getting better, but I know it wouldn't be considered "good" YET.

While I assumed it's still going to be a quite a while that is be able to get approved for a home loan, a few friends of mine suggested I looked into FHA loans, that I could very well get approved.....I know nothing about loans, etc, so any info would be helpful. Thanks! Phone Post 3.0

You pay less up front, but your interest rate will be higher. Phone Post 3.0

you'll also need to pay mortgage insurance if you put less the 20% down

bruddahoodaman - You pay less up front, but your interest rate will be higher. Phone Post 3.0


Not sure about interest rate being higher, but you will pay PMI which is basically just a fee to the banks for taking on a risky loan.  They changed the law recently so that PMI doesn't go away after 5 years, so you actually pay it for the duration of the loan.

mixedmartialfarts -
bruddahoodaman - You pay less up front, but your interest rate will be higher. Phone Post 3.0


Not sure about interest rate being higher, but you will pay PMI which is basically just a fee to the banks for taking on a risky loan.  They changed the law recently so that PMI doesn't go away after 5 years, so you actually pay it for the duration of the loan.

How much is the PMI? Phone Post 3.0

125ish a month. Phone Post 3.0

Amount of PMI depends on size of the loan. It is a percentage. Phone Post 3.0

mixedmartialfarts -
bruddahoodaman - You pay less up front, but your interest rate will be higher. Phone Post 3.0


Not sure about interest rate being higher, but you will pay PMI which is basically just a fee to the banks for taking on a risky loan.  They changed the law recently so that PMI doesn't go away after 5 years, so you actually pay it for the duration of the loan.

Is this right? I think PMI goes away once you pay the loan down 20%.

PMI rate is determined by the loan amount and credit scores are also factored in the rate.

You can go to MGIC.com to get a rough PMI estimate/rate. Phone Post 3.0

Fha loan is 3.5% down and then mortgage insurance is calculated on the amount of the loan. You can then get the mortgage insurance to come off the loan once you get %20 equity in the house. Meaning the house is worth more than what is owed. For example a 100k loan. If you pay down till there is only 80k left to pay on it then you can have the mortgage insurance dropped. Phone Post 3.0

RockstarWestfall - Long story short, I've had shitty credit for a long time now from dumb mistakes when I was younger. Now that I have a wife and daughter, and one on the day, I realized it was time to straighten shit out, because we want to buy a home.

I hired lexington law a few months back, and they actually have helped so far with my credit score. And while I don't know exactly what my credit score is, I know it's getting better, but I know it wouldn't be considered "good" YET.

While I assumed it's still going to be a quite a while that is be able to get approved for a home loan, a few friends of mine suggested I looked into FHA loans, that I could very well get approved.....I know nothing about loans, etc, so any info would be helpful. Thanks! Phone Post 3.0
Get a copy of your credit report. Most important then call the creditors yourself and do the same thing. Fha loans only require a 580 score 620 is favorable however. Phone Post 3.0

Tb0072 - Fha loan is 3.5% down and then mortgage insurance is calculated on the amount of the loan. You can then get the mortgage insurance to come off the loan once you get %20 equity in the house. Meaning the house is worth more than what is owed. For example a 100k loan. If you pay down till there is only 80k left to pay on it then you can have the mortgage insurance dropped. Phone Post 3.0
They changed the rules for PMI with FHA loans, it last the duration of the loan no matter your equity. The only way to get rid of PMI on an FHA loan is to refinance. Phone Post 3.0

There are debt to income restrictions on fha loans as well, and the property has to be insurable.

Total house payment has to be less than 31% of your gross income

Total of all debts has to be less than 43% of your gross income.

Really need to determine your credit score before you can make any decisions. Phone Post 3.0

lon23 -
mixedmartialfarts -
bruddahoodaman - You pay less up front, but your interest rate will be higher. Phone Post 3.0


Not sure about interest rate being higher, but you will pay PMI which is basically just a fee to the banks for taking on a risky loan.  They changed the law recently so that PMI doesn't go away after 5 years, so you actually pay it for the duration of the loan.

Is this right? I think PMI goes away once you pay the loan down 20%.

PMI rate is determined by the loan amount and credit scores are also factored in the rate.

You can go to MGIC.com to get a rough PMI estimate/rate. Phone Post 3.0
I could definitely be wrong there (and hope that I am). I could have sworn back in 2014 they changed the law, but again I might be mistaken.

For op, my wife and I pay about $190 a month in PMI for a $235,000 loan. Phone Post 3.0

Fucked Hard Asshole? Phone Post 3.0

me lurk you long time -
Tb0072 - Fha loan is 3.5% down and then mortgage insurance is calculated on the amount of the loan. You can then get the mortgage insurance to come off the loan once you get %20 equity in the house. Meaning the house is worth more than what is owed. For example a 100k loan. If you pay down till there is only 80k left to pay on it then you can have the mortgage insurance dropped. Phone Post 3.0
They changed the rules for PMI with FHA loans, it last the duration of the loan no matter your equity. The only way to get rid of PMI on an FHA loan is to refinance. Phone Post 3.0
I did not realize this. That could end up being very costly barring a future refinance. Phone Post 3.0

FHA MIP is generally .80% of your loan amount:
100k loan x.80, then divide by 12: 67/month

FHA allows a 3.5% down payment. Conventional loans are generally 5%, although there are 3% options. FHA also is slightly more lenient with credit history than traditional conventional loans.

MGIC will only have solely conventional MI rates.

As noted, conventional MI goes away after you pay your loan to a 78% Loan to Value, and FHA MI generally doesn't go away until you pay off the loan or refinance your loan. With rates as low as they are, don't ever expect to be able to refinance to a lower rate 5 years from now.

An FHA loan, to answer your original question, is simply a loan that gets insured by HUD. Loans must meet minimum criteria established by HUD for insuring in their Handbook version 4155.2: version 4000.1 is publishing 9/14/15 with some minor changes.

Lenders generally have guidelines that meet HUD's standards, and occasionally add overlays (stricter guidelines than the minimum) to avoid a high default ratio.

In for info about adult stuff. Phone Post 3.0

FHA = Federal Homosexual Administration

It's a new mortgage program designed to provide low interest loans to the gays.

It was devised by Obama and Rahm Immanuel during a particularly hot visit to a Chicago bath house. Phone Post 3.0

It's a sign you need to save up more down payment and/or work on your credit before purchasing a home. Phone Post 3.0