Don't let a low down payment hold you down

Tanya Robinson, AVP Real Estate

Tanya Robinson,
AVP Real Estate Lending


The Federal Housing Administration is currently the go-to program for home buyers who don’t qualify for conventional loans. The better news is you could potentially get a lower rate on an FHA loan than a conventional.

FHA mortgage rates

Thanks to solid government backing, lenders can offer an FHA mortgage at interest rates much lower than rates offered for conventional loans. A recent study conducted by mortgage software company Ellie Mae reported FHA loans averaged 4.31% last December, while conventional loans averaged 4.32%.

So, even with damaged credit, you can get a great rate. Yes, these loans come with mortgage insurance, but the overall cost per month is not that much more than for conventional loans.

The FHA loan is one of the most popular options due to its lenient requirements.

Who is this loan good for?

About 40% of home buyers under age 37 use FHA, but plenty of older buyers choose it, too. This loan is best for those who don’t want to put a lot of money down, but still want great rates and flexible credit requirements.

Credit: This is where FHA loans shine. You don’t need perfect credit or anywhere near to qualify.

Down payment required: 3.5%. However, 100% of the down payment can be a financial gift from a relative or approved non-profit.

Eligibility: U.S. citizens and permanent residents are eligible for an FHA loan. You do not have to be a first-time home buyer to qualify.

FHA mortgage insurance premium (MIP) and fees: 1.75% upfront and 0.85% of the loan balance per year, paid in 12 equal installments with the mortgage payment. On a $200,000 loan, that’s $3,500 upfront and $141 per month. The upfront fee can be rolled into the loan amount and does not need to be paid in cash.

FHA monthly mortgage insurance is non-cancellable without a refinance. This is one disadvantage of FHA compared to conventional loans, mortgage insurance for which can be removed when the home reaches 20% equity. To cancel FHA mortgage insurance, you must refinance into a conventional loan.

If purchasing a home is on your wish list, we need to talk – even if you think homeownership is out of your reach. We’ve helped thousands of people over the last 30 years overcome seemingly impossible hurdles. That’s the Travis Credit Union advantage – people helping people. We have experienced mortgage loan consultants ready to meet with you. We also offer free home buying seminars to help you better understand the process and develop a solid plan to get you started. Visit our Online Calendar at traviscu.org/calendar for a full listing of upcoming seminars.

Get started today and find out how we can help you get into your next home with our FHA loan, 97% loan, or No Points, No Fees Home Loan. We even offer up to 100% mortgage financing for borrowers with very good credit.

Take advantage of today’s low interest rates and rising property values to refinance with Travis. You can apply online at traviscu.org/real-estate or call us toll free at (888) 698-0000 to get started.

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*Federal Housing Administration (FHA) insured loans are backed by the U.S. government. Certain requirements apply. FEDERAL HOUSING ADMINISTRATION (FHA) UP-FRONT MORTGAGE INSURANCE PREMIUM (UFMIP) AND ANNUAL MORTGAGE INSURANCE PREMIUM (MIP) FHA up-front mortgage insurance premium and mortgage insurance premium (MIP) and fees payment example is based on a $200,000 loan amount, 1.75% upfront (UFMIP) $3500 and 0.85% (MIP) $141 of the loan balance per year, paid in 12 equal installments with the mortgage payment. FHA loans are subject to an up-front mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). The premium varies based on your specific loan transaction. An estimated mortgage insurance payment has been included in the payment example for illustrative purposes. Payment example excludes principal, interest, taxes, and insurance, total payment will be higher. Quoted UFMIP and MIP premium factors are for an owner-occupied property, purchase transaction with a loan-to-value ratio of 96.5% and a minimum FICO score greater than 620.