Is an Iowa FHA Loan Right For You?

Buying a home is a big milestone, but navigating the various home loan options can feel overwhelming.  While your mortgage lender will help you find the best fit, it's helpful to understand your choices.

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What is an FHA Loan?

FHA loans are offered in partnership with and insured by the U.S. Department of Housing and Urban Development (HUD).

This program was created to make homeownership more accessible and comes with a guarantee that reduces the lender's risk, making it easier for borrowers with limited down payments or less-than-perfect credit to secure a mortgage.

Pros and Cons of FHA Loans

While FHA loans offer many benefits, they also have some disadvantages. It's important to weigh the pros and cons before deciding if an FHA loan is right for you.

FHA Loan Requirements

Borrowers must meet several requirements to qualify for an FHA loan. These include: 

• Credit score minimums

• Specific guidelines for down payments and gift funds

• Mortgage insurance requirements

Credit Score Requirements For FHA Loans

FHA loans require a minimum credit score of 580 to qualify for the 3.5% down payment advantage. Borrowers with credit scores between 500 and 579 may still be eligible but need a 10% down payment.

Down Payments Requirements For FHA Loans

FHA loans require a down payment of as low as 3.5%, which can be covered by gift funds from approved sources, such as family members, employers, or charitable organizations.

Mortgage Insurance Requirements For FHA Loans

FHA loans require mortgage insurance premiums to protect the lender in case of default. These premiums include an upfront payment and monthly annual payments..

How to Apply for an FHA Loan?

Applying for an FHA loan involves several steps, including gathering financial documents, getting pre-approved, and working with an FHA-approved lender to complete the application process.

To start, you need to find an FHA-approved lender.

Choosing an FHA-Approved Lender

FHA loans must be obtained through an FHA-approved lender or broker. In the Cedar Rapids/Marion, Iowa area, several community banks and credit unions, including Farmers State Bank, offer FHA loans.

Is an FHA Loan Your Best Option?

For moderate-income borrowers who can't afford a large down payment or have past credit blemishes, an FHA-insured mortgage loan can be an excellent option.

With competitive rates, flexible qualification criteria, and the ability to include closing costs in the loan, FHA loans provide a path to homeownership for many Eastern Iowa residents.

Apply Online

Must be 18 or older to apply. Loans subject to credit approval.

Questions About FHA Loans?

FSB is ready to assist you every step of the way, aiming to make your homebuying experience as stress-free as possible.

Contact the FSB Mortgage team at 319-730-6990.

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