FHA Mortgages in Atlanta
Looking to get a FHA loan in Atlanta, or just want to learn more about them? We’re here to help you get all the information you need and help you on your journey to home ownership.What is an FHA mortgage?
An FHA mortgage is a government-supported home loan overseen by the Federal Housing Administration. This loan is crafted to promote homeownership for individuals with not-so-high credit scores or those lacking substantial down payments. Unlike standard loans, FHA loans tend to be more forgiving when it comes to credit evaluations and often mandate a reduced initial down payment. For individuals who find it challenging to secure conventional mortgage options, this serves as a viable choice. Borrowers can choose between a fixed or variable interest rate with the FHA mortgage, though many lean towards the fixed rate for its stability. It’s worth noting, however, that FHA loans come with the stipulation of mortgage insurance premiums, which can elevate the cumulative loan expense.
How FHA mortgages work
Mortgage rates frequently shift due to a variety of influences. For instance, today’s rate might stand at 6.75 percent, only to dip to 6.5 percent the following day. However, with an FHA mortgage that offers a fixed rate, once you lock in your rate, it’s set in stone, immune to the whims of market changes.
Contrastingly, while ARMs (Adjustable Rate Mortgages) may change, the fixed-rate FHA mortgage guarantees a steady rate for the entire duration of the loan. Your monthly installment for this kind of loan doesn’t waver, but how the payment is split between the principal and interest will evolve according to the amortization schedule.
In the beginning stages, interest takes up a more significant chunk of your payment. As time progresses, a growing portion chips away at the principal. Such a payment design helps homeowners gradually accumulate equity in their homes.
To be eligible for FHA loans, there are specific criteria to meet. Here’s a detailed breakdown of the prerequisites for an FHA loan for those residing in Georgia.
- Down payment of 3.5% or 10% if your credit score is below 580
- 2-year employment history with some exceptions allowed
- Fully document your income for the past two years
- Minimum FICO score requirement of 500 – down payment will vary
- Mortgage Insurance Premium (MIP) is required for every FHA loan
- Maximum debt to income ratio of 43% with exceptions up to 56%
- The home must be your primary residence
- No bankruptcies or foreclosures in the past two years
- Home must be Safe, Secure, and Structurally Sound.
Pros of an FHA Mortgage
The standout feature of an FHA mortgage is its inclusiveness. It offers reduced initial payment demands and is accommodating when it comes to credit history, making it a preferred choice for many entering the housing market for the first time. An FHA loan’s fixed-rate ensures consistency in monthly payments, offering homeowners security against potential interest rate hikes. This unique mortgage plan champions those who might find traditional financing out of reach, expanding the dream of homeownership to a wider community.
- Accessibility
- Lower Down Payment
- Flexibility in Credit Requirements
- Predictable Payments
- Support for a Wider Range of Borrowers
Cons of FHA Mortgage
While the FHA mortgage presents the advantage of requiring lower initial down payments, it also comes with the stipulation of mandatory mortgage insurance premiums. These premiums can contribute to an elevated total loan cost over time. There are also potential restrictions on the maximum amount you can secure, which vary based on the locale. Opting for a reduced down payment may lead to borrowing more and consequently, possibly heftier monthly installments. In scenarios where property values witness a significant upswing, transitioning from an FHA mortgage to a conventional one to sidestep the mortgage insurance could be an option. However, this switch is not without its own set of expenses and potential complications. Given the loan’s endorsement by the government, applicants might encounter additional documentation needs or criteria to fulfill.
- Mortgage Insurance Premiums
- Loan Limits Based on Region
- Potential for Higher Monthly Payments
- Considerations for Refinancing
- Additional Paperwork or Requirements
Your Trusted Atlanta Mortgage Lender
Established in 1909, Mutual of Omaha has consistently shown unwavering commitment to its clientele. Guided by deep-rooted community ethics, we emphasize compassion, accountability, and the prosperity of our customers. As a mortgage lender, we don’t solely chase market profits but also aim to help our customers achieve their fiscal aspirations. Mutual of Omaha Mortgage stands ready to assist you, whether you’re contemplating a home acquisition or a refinance. For those in Atlanta eyeing a home purchase or seeking refinancing options, reach out to us today.