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If you have been shopping around for different mortgage options around Sacramento, you’ve likely come across the FHA Loan. This mortgage is administered by the Federal Housing Administration. It allows home buyers to purchase a home with a low down payment, often as low as 3.5% of the purchase price. There are a few stipulations to use the FHA Loan as well as additional steps that you’ll need to take to pay it back.
Is PMI Required?
When using an FHA Loan, you will need to pay for private mortgage insurance, PMI. This extra amount is added to your monthly payment. Once you reach a higher amount of equity, either through paying your mortgage down or a significant change in the housing market, you may be able to refinance your loan so that you no longer have to pay PMI. Depending on how much you put down a down payment, this premium may no longer be required after 11 years.
Who Can Use an FHA Loan?
The FHA Loan is a good option for first-time home buyers or those who don’t have a hefty down payment saved up. This is not a requirement, however. Anyone can apply for an FHA Loan, even if they have purchased a home before. There are not income limitations or requirements beyond what your lender requires to approve you for the amount that you want to borrow.