The Federal Housing Administration (FHA) was established in 1934 with the primary goal of improving the US housing market. To achieve this goal, the FHA insures home loans that are offered by approved lenders. FHA loan programs make it possible for homebuyers to receive great rates and qualify with less than ideal credit while lenders are protected from borrower default. Family First Mortgage offers the most competitive rates on FHA loans throughout Lafayette, Baton Rouge, Lake Charles, and the surrounding Louisiana communities.
FHA loans are a popular choice among first-time homebuyers throughout Louisiana given their low down payment and relaxed credit requirements. A borrower may be able to qualify for an FHA loan with a credit score of 580 and a down payment of only 3.5%. Family members can even offer the down payment as a gift if the borrower does not have the cash on hand. Loan limits vary by county and can range from $271,000 up to $636,500 in high-cost areas.
Louisiana FHA Loan Requirements
- Credit Score – A minimum credit score of 580. It may be possible to qualify with a score between 500 and 579 but a larger down payment will be required.
- 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.
The many benefits of FHA loan programs are made possible by mortgage insurance. Two premiums are paid with each FHA loan. One is an up-front premium of 1.75% of the purchase price. This premium is automatically added 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 from buyer to buyer depending on factors such as total loan amount, length of the mortgage, and loan-to-value (LTV) ratio.
Cash-out refinance and streamline refinance programs are also available 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 as well. 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 Louisiana, or are a current homeowner looking to refinance an existing FHA loan, at Family First Mortgage, we offer great rates and terms on all FHA loans. Contact us today for more information on FHA loans throughout Lafayette, Baton Rouge, and Lake Charles, or to begin the pre-qualification process!