An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.
There are countless reasons why an FHA loan might be right for you, but here at Bank of England Mortgage, we believe that these five features are what really sets FHA loans apart.
FHA loans are not score driven. Instead, they are written in a way that provides the borrower the benefit of the doubt that there had been, at some point in their past, circumstances beyond their control, and as long as the borrower has recovered from those circumstances in a reasonable manner, they're generally going to be credit-eligible for an FHA loan.
A distinct advantage of an FHA insured loan, as compared to a conforming loan, is great interest rates and lower monthly mortgage insurance (MI). Depending on the program, standard FHA loan interest rates are usually better than a conforming 30-Year Fixed loan.
FHA guidelines give you the option of doing hybrid Adjustable Rate Mortgages (ARM), including a 3/1 ARM and a one year ARM that has the lowest adjustment caps of any ARM in the industry.