FHA Loans Made Simple: Flexible Terms and Low Down Payments for Your New Home

Low Down Payments

580 Minimum Score

Lower Interest Rates

Top FHA Lender for First Time Buyers in Michigan

Pro Mortgage Funding

Top Rated Mortgage Lender

FHA Purchase / FHA Streamline Options
We Offer 1% Down Payment Programs
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What is an FHA Loan?

An FHA loan is a mortgage that is insured by the Federal Housing Administration (FHA), a government agency that provides protection to lenders in case the borrower defaults. This insurance encourages lenders to offer loans to borrowers who may not qualify for conventional loans due to lower credit scores or smaller down payments

What are the Features of an FHA Loan in Michigan?

Lower Credit Requirements: FHA loans are popular with first-time homebuyers and those with lower credit scores. A credit score of 580 or higher is typically required to qualify with a down payment of 3.5%, though some lenders may allow scores as low as 500 with a 10% down payment.

Low Down Payment: Borrowers can put down as little as 3.5% of the home's purchase price, making homeownership more accessible for those who may not have saved up a large down payment.

Mortgage Insurance Premiums (MIP): FHA loans require two types of mortgage insurance: an upfront mortgage insurance premium (UFMIP) that is typically 1.75% of the loan amount, and an annual mortgage insurance premium (MIP), which is paid monthly. This insurance protects the lender, not the borrower.

Flexible Debt-to-Income Ratios: FHA loans often allow borrowers with higher debt-to-income ratios to qualify compared to conventional loans, making it easier for those with other debts, such as student loans, to secure a mortgage.

Loan Limits: FHA loans have limits on how much you can borrow, which vary by location. In high-cost areas, these limits are higher to accommodate local housing prices.

Refinancing Options: FHA loans offer refinancing options, including streamline refinancing, which allows for a simplified process without requiring a full credit review, appraisal, or income verification in certain cases.

What are the Pro's and Con's of a Michigan FHA Loan?

Benefits of an FHA Loan:

Lower Credit Score Requirements: FHA loans are ideal for borrowers with lower credit scores. You can qualify with a score as low as 580 with a 3.5% down payment, and even with a score as low as 500 with a 10% down payment.

Smaller Down Payment: With an FHA loan, you can put down as little as 3.5% of the home’s purchase price, making it easier for buyers with limited savings to purchase a home.

Flexible Debt-to-Income Ratios: FHA loans often allow borrowers with higher debt-to-income (DTI) ratios to qualify, making it possible for those with existing debt (like student loans or car payments) to secure a mortgage.

Easier Refinancing: FHA loans offer streamlined refinancing options, which allow borrowers to refinance their loans with reduced paperwork and without a full credit review or appraisal.

Assumable Loans: FHA loans are assumable, meaning if you sell your home, the buyer can take over your mortgage, potentially benefiting from lower interest rates.

Drawbacks of an FHA Loan:

Mortgage Insurance Premiums (MIP): FHA loans require both an upfront mortgage insurance premium (UFMIP) and ongoing monthly mortgage insurance (MIP) payments. These insurance costs apply regardless of the size of your down payment and typically last for the life of the loan unless you refinance into a conventional mortgage.

Loan Limits: FHA loans have maximum loan limits that vary by location. In higher-cost areas, the limits are higher, but this can still restrict your ability to purchase more expensive properties.

Property Requirements: FHA loans have strict property standards to ensure the home meets safety and livability requirements. If a property needs significant repairs, it may not qualify for an FHA loan, or the repairs will need to be made before closing.

Pro Mortgage Funding LLC, NMLS ID 2119829. 43422 W Oaks Dr. Suite 421 Novi, MI 48377. For licensing information, go to: www.nmlsconsumeraccess.org. This company is not endorsed by the federal housing association. This is for informational purposes. Subject to Credit Approval.

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