FHA Three Ways

Posted on June 06, 2024

FHA home loans, mortgages backed by the Federal Housing Administration (FHA), allow for lower down payments and can be easier to qualify for than conventional financing. They also come with competitive mortgage interest rates and allow for seller-paid closing costs—both benefits that can save you money.

At United, in addition to a traditional FHA loan, we offer the option to use FHA for a manufactured home (a more affordable housing option) or to combine it with a second loan to cover the down payment or closing costs on your mortgage.

Traditional FHA

A traditional FHA loan could be a great option for you if you haven’t saved enough for a big down payment or your credit score isn’t as high as you’d like it to be.

Currently, FHA loan applicants may qualify with a 3.5% down payment.
The minimum credit score is lower than a conforming loan, so you may qualify with fair-to-good credit. We require a minimum 600 credit score for an FHA loan.
Even if over 40% of your monthly income goes toward paying off auto loans, credit cards, or a student loan, you may still qualify.

It’s important to be aware that FHA loans do have added costs. To protect lenders against a loan default, FHA loans come with an Up-Front Mortgage Insurance Premium (UFMIP) and a Monthly Insurance Premium (MIP).

FHA for Manufactured Homes

If a traditional home is outside of your budget, you could also use an FHA loan to purchase a manufactured home. Manufactured homes are more affordable, averaging between 15% to 35% less per square foot in construction cost, without sacrificing quality. They’re built in a controlled environment (without any weather interruptions) using the best possible materials and strict building standards.

A manufactured home could also be a good option if you live in an area with limited housing inventory or keep getting outbid by other buyers. On top of that, our minimum credit score for an FHA loan (600) is lower than a conforming loan, so you may qualify with fair-to-good credit.

FHA with Down Payment Assistance

If a 3.5% down payment isn’t possible for you, you could qualify for an FHA loan with down payment assistance to cover the cost. If you purchase a home using a 30-year, fixed-rate FHA loan, you have the option to secure a 10-year second mortgage that can be used to help cover your down payment and/or closing costs. It’s a separate loan combined with your mortgage that’s designed to make it possible for you to become a homeowner, even if you haven’t been able to save for a down payment.

Here are some of the program details:

You must have a minimum 600 credit score.
You must be buying a primary home using a 30-year, fixed-rate FHA loan.
Down payment assistance up to 3.5% of the sales price or appraised value (whichever is less) is available.
Each borrower on the loan must have a minimum of one credit score.
There are no income limits, and you don’t have to be a first-time homebuyer.
Your down payment assistance will come in the form of a second, 10-year loan with a note rate 2% greater than the rate on your FHA loan.

Ready to find out whether one of our FHA home loans is the right fit for you? Contact our team or start your secure, digital application now. We’re here to help you every step of the way.

Not all borrowers will qualify and restrictions apply. This is not a commitment to lend.