The Federal Housing Administration (FHA) was developed as part of the National Housing Act of 1934 with the goal of improving the housing market. This is accomplished by insuring home loans offered by approved lenders. FHA loan programs allow homebuyers to receive great rates and qualify with less than ideal credit while lenders are protected from borrower default. The FHA offers loan options for purchases, refinances, and special renovation projects. Troy Mannella – LNM Lending Team of Security National Mortgage Company offers great rates on FHA loans throughout Austin, Round Rock, Hutto, and Leander.
Low down payment and relaxed credit requirements have made FHA loans a popular choice among first-time homebuyers throughout Texas. It is possible to qualify for an FHA loan with a credit score of 580 and a down payment of only 3.5%. The down payment can even be gifted from a family member if the buyer doesn’t have cash on hand. Loan limits vary by county and can range from $271,000 up to $636,500 in high-cost areas.
Texas FHA Loan Requirements
- Credit Score – A minimum credit score of 580. Those with a score between 500 and 579 could potentially qualify with a higher down payment.
- Debt-to-Income Requirements – A debt-to-income (DTI) ratio of 43% or less. A DTI ratio of up to 50% may be approved in special cases.
- Down Payment – 3.5% of the purchase price if credit requirements are met.
- Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.
Mortgage insurance is what makes FHA loan programs possible. With each FHA loan, two mortgage insurance premiums (MIP) must be paid. One is an up-front premium of 1.75% of the purchase price which will be added automatically to your total mortgage amount at closing. The second premium is paid monthly as part of your mortgage payment and will be between .45% and 1.05% of your annual mortgage balance. The rate varies form buyer to buyer depending on factors such as total loan amount, length of the mortgage, and loan-to-value (LTV) ratio.
The FHA also offers cash-out refinance and streamline refinance programs to current FHA loan holders. To help protect borrowers, streamline refinancing is only available if the borrower will save money through the refinance. Borrowers who want to purchase a home while making renovations at the same time will find the FHA 203k loan to be a valuable option. This unique type of home loan allows a borrower to combine the purchase of a home and the cost of renovations and repairs into a single mortgage.
Whether you are looking to purchase your very first home in Texas, or are a current homeowner looking to refinance an existing FHA loan, at Troy Mannella – LNM Lending Team of Security National Mortgage Company, we offer great rates and terms on all FHA loans. Contact us today for more information on FHA loans throughout Austin, Round Rock, Hutto, and Leander, or to begin the pre-qualification process!