FHA Loans: An Alternative Home Financing Proposal

If you have dreamed of owning, building or renovating a home of your own, but worry your less-than-perfect financial standing will exclude you from financing options, there is hope. FHA loans are a nonconventional mortgage option with minimal approval requirements and other great benefits. FHA loans were introduced in 1934 by the Federal Housing Administration to encourage private lenders to approve more borrowers for loans. While these loans are privately funded, they are insured through the government, which means less risk for lenders. The team at Bell Financial Group has been financing clients from all types of financial backgrounds for more than 20 years in Boise, Pocatello, Blackfoot, Idaho Falls, Rigby, Rexburg and surrounding Idaho. Our mortgage experts can quickly determine if an FHA loan or another home financing solution makes sense for you and guide you through the process. When you’re ready to learn more about FHA loans, contact us.

Nonconventional Home Financing

FHA loans are just one of several types of nonconventional loans, each of which serves a unique segment of homebuyers. Other common nonconventional mortgages include VA loans (sponsored by the U.S. Department of Veterans Affairs) and USDA loans (sponsored by the U.S. Department of Agriculture). The Federal Housing Administration is a division of the U.S. Department of Housing and Urban Development. FHA loans fund borrowers who may not otherwise qualify for a conventional loan. While ultimately, the lending group that funds the loan determines who is and isn’t approved, the FHA backing alleviates the lender’s risk, to some degree.

FHA Loan Benefits

FHA loans are a great option for clients who for one reason or another want a low down payment – as low as 3.5% with a score of 580 or higher, and 10% with a 500-579 score. Compared with conventional loans that in some cases require 20% down minimum, this is a huge up-front savings. Down payments can be given as gifts and down payment assistance programs exist as well, for those who still may struggle to raise funds.

FHA loans allow some flexibility at closing in addition to a low down payment. If written in a borrower’s contract, the seller of a home can agree to pay closing costs of up to 6% of the loan value. Again, this helps reduce the up-front investment required from home financing.

One of the greatest advantages of FHA loans are their easy qualifying requirements. As lenders, we are encouraged to approve clients with lower monthly income and higher debt-to-income ratios (DTI) than might be approved for conventional loans, because the government will cover the loan in the case of default.

A Lending Partner Who Cares

FHA loans are great for first-time homebuyers and seasoned homeowners alike. If you are worried that you may not qualify for a conventional loan, this is a wonderful mortgage solution to explore. At Bell Financial, our mortgage professionals have the power of big bank lending, but with one-on-one attention and local knowledge on our side. If you are considering purchasing a home in Boise, Pocatello, Blackfoot, Idaho Falls, Rigby, Rexburg, or surrounding Idaho neighborhoods, contact us to learn more about FHA loans today.