Trending Now :

What Does the Hot Inflation Report Mean for the Housing Market How Do You Build Wealth: Invest in Yourself Times Up for Programmed Money Biggest Financial Crimes: Countrywide Quantitative Tightening, Inflation, & More The Stock Market Is On Sale Investors Need to Netflix and Chill Credit Card Fixed-Interest Loans: Explained Are You Money Smart? Build Your Credit for Free Filing Your Taxes in 2022 Credit Cards that Offer 2% Cashback on All Purchases Navient Ordered to Cancel Student Loans U.S. Mortgage Interest Rates Soaring Two Big Banks Cut Overdraft Fees 2022 IPO DRAFT CLASS: Ranking the Top 10 Prospects Re-Drafting the 2021 IPO Draft All You Need to Know about Buy Now Pay Later companies Credit Card Sign-Up Bonus or SUB The Best Credit Card for the Middle-Class Make An All-cash Offer with No Cash Capitalism Always Ignores Politics All You Need to Know about the Financial crisis of 2007-2008 American Families Face Serious Rent Burden Savings Is An Expense You Can’t Build Generational Wealth If You Are Broke IT’S OFFICIAL: Robinhood is a Meme Stock All You Need to Know About Biden Mortgage Modifications & Payment Reductions Apple Card 2nd Year Anniversary: Should You Get It Now Wells Fargo to Pull Customers Personal Lines of Credit The Rise of Individual Investors The US Housing Market Is Booming. Is a Crash Ahead? Financial Literacy: How to Be Smart with Your Money Non-Fungible Token (NFT):EXPLAINED SKYROCKETED CEO PAY & LONG LINES AT FOOD BANKS Amazon Workers Want to Unionize Another Major City Piloted Universal Basic Income The New Bubble: SPACs SUBMIT YOUR PPP ROUND 2 APPLICATION BEFORE MARCH 31ST Robinhood-GameStop Hearing & Payment for Order Flow Guess Who’s Coming to Main Street Democratic Senators Say No to $15 Minimum Wage BEZOS OUT! President Biden Most Impressive Act Went Unnoticed: CFPB Biden $1.9 Trillion Stimulus Package 2021 IPO DRAFT CLASS: Ranking the Top 10 Prospects $25 Billion Emergency Rental Assistance NO, TESLA IS NOT WORTH MORE THAN TOYOTA, VOLKSWAGEN, HYUNDAI, GM, AND FORD PUT TOGETHER AMAZON TO HAND OUT ITS WORKERS $300 HOLIDAY BONUS Where Does the American Middle-class stand on Student Debt Relief? Joe Biden’s Economic Plan Explained 4 TYPES OF BAD CREDIT REPORTS AND HOW TO FIX THEM What Is the Proper Approach to Not Buy Too Much House? FISCAL STIMULUS PLANS STILL IN ACTION How to Pick Investments for Your 401(k) 10 Simple Ways to Manage Your Money Better All You Need to Know about Reverse Mortgage All You Need to Know about Wholesale Real Estate Credit card Teaser Rates AVERAGE CREDIT CARD INTEREST RATE SURGES TO 20.5 Percent Trump Signs 4 Executive Orders for Coronavirus Economic Relief The Worst American Economy in History WHY CREDIT CARDS MINIMUM PAYMENTS ARE SO LOW? 10 BIGGEST COMPANIES IN AMERICA AND WHO OWNS THEM White House Wants to End the Extra $600-A-Week Unemployment  10 Countries That Penalize Savers FEWER CREDIT CARD BALANCE-TRANSFER OFFERS ARE IN YOUR MAILBOX Private Payrolls and the Unemployment Rate SHOULD YOU BUY INTO THE HOUSING MARKET RESILIENCY? WILL WE GET A SECOND STIMULUS CHECK The Child Tax Credit and Earned Income Tax Credit THE RETURN OF BUSINESS CYCLES Should You Request a Participant Loan or an Early 401(k) Withdrawal? Homebuyers Should Not Worry about Strict Mortgage Borrowing Standards The Potential Unintended Consequences of Mortgage Forbearance All Business Owners Need to Know about the Paycheck Protection Program 10 MILLION UNEMPLOYMENT CLAIMS IN TWO WEEKS HOW WILL THE GLOBAL MIDDLE-CLASS RECOVER FROM A SECOND ECONOMIC RECESSION IN A DECADE? WILL U.S. CONSUMERS CONTINUE TO SPEND? HOW’S YOUR 401(k) PRESIDENT TRUMP SIGNS $2.2 TRILLION CORONAVIRUS STIMULUS BILL MIDDLE-CLASS NIGHTMARE: MORE THAN 3.3 AMERICAN FILED FOR UNEMPLOYMENT CLAIMS IN THE US LAST WEEK. LAWMAKERS AGREED ON $2 TRILLION CORONAVIRUS STIMULUS DEAL CORONAVIRUS STIMULUS PACKAGE FAILED AGAIN IN THE SENATE APRIL 15 (TAX DAY) DELAYED DEMOCRATS AND REPUBLICANS DIFFER ON HOW $2 TRILLION OF YOUR TAX MONEY SHOULD BE SPENT YOU CAN DELAY MORTGAGE PAYMENTS UP TO 1 YEAR, BUT SHOULD YOU? 110 Million American Consumers Could See Their Credit Scores Change The Middle-Class Needs to Support Elizabeth Warren’s Bankruptcy Plan The SECURE Act & Stretch IRA: 5 Key Retirement Changes 5 Best Blue-chip Dividend Stocks for 2020 9 Common Bankruptcy Myths 401(K) BLUNDERS TO AVOID Government Policies Built and Destroyed America’s Middle-Class & JCPenney Elijah E. Cummings, Esteemed Democrat Who Led the Impeachment Inquiry into Trump, Dies at 68 12 Candidates One-stage: Who Championed Middle-Class Policies the Most WeWork: From Roadshow to Bankruptcy Stand with the United Auto Workers Formal impeachment Inquiry into President Donald Trump America Is Still a Middle-Class Country SAUDI OIL ATTACKS: All YOU NEED TO KNOW THE FEDERAL RESERVE ABOLISHED BUSINESS CYCLES AUTO WORKERS GO ON STRIKE Saudi Attacks Send Oil Prices Spiraling REMEMBERING 9/11 What to Expect from the 116th Congress after Their August Recess Should You Accept the Pain of Trump’s Trade War? 45th G7 Summit-President Macron Leads Summit No More Upper-Class Tax Cuts Mr. President! APPLE CARD IS HERE-SHOULD YOU APPLY? THE GIG ECONOMY CREATES A PERMANENT UNDERCLASS 5 REASONS IT’S SO HARD FOR LOW-INCOME INDIVIDUALS TO MOVE UP TO THE MIDDLE CLASS ARE YOU PART OF THE MIDDLE CLASS? USE THIS CALCULATOR TO FIND OUT? WELLS FARGO IS A DANGER TO THE MIDDLE CLASS The Financialization of Everything Is Killing the Middle Class
FHA LOANS
American Middle Class

BEST LENDERS FOR FHA LOANS

The estimated reading time for this post is 199 seconds

FHA loans are in demand again a decade-plus years after the Great Recession.  With its low down-payment and credit score requirements, Federal Housing Administration (FHA) loans are the way that low-income Americans can buy homes.

According to a HodPads report, it will take about 6 ½  years to save for a 20% mortgage down payment on the median-priced home ($282,000) in America.  Potential homebuyers can get FHA loans with a down payment of as little as 3.5 percent. 

How Do FHA Loans Work?

Homebuyers cannot apply for FHA loans directly through the Federal government.  Banks and non-bank lenders underwrite FHA loans, and the government promises to pay them if the borrower defaults on the loan. 

The appeal of FHA loans, mostly among millennials, makes FHA lending an attractive business unit to brick-and-mortar banks, FinTech, and non-bank firms. 

The Department of Housing and Urban Development (HUD) runs the FHA loans.  HUD has on its website the criteria that firms have to meet to become FHA-approved lenders.  However, fees, rates and terms, and other costs can vary amongst FHA lenders.  

You can’t buy a million-dollar home via the FHA program. If you are thinking about applying for an FHA loan, you can check the loan limits in your area here.  Below are the five best FHA lenders in 2020:

Quicken LoansFHA LOANS

Quicken Loans utilizes technology effectively to facilitate its FHA application process.  You can apply via its App or on the phone. They have great customer support that can walk you through the process and answer all your questions

  • FICO® score:   580
  • down payment: 3.5%
  • Debt-to-Income Ratio:  50% or below
  • Upfront mortgage insurance premium (UFMIP): 1.75% of the loan amount
  • Customer Support: Good
  • Closing Costs/Points:  From 2% – 6% of the purchase price.

FHA LOANSNew American Funding

New American Funding has gifts or grants allowed toward down payment.  Their representatives will walk you through the process from start-to-finish.

  • FICO® score:   580
  • Down payment: 3.55%
  • Debt-to-Income Ratio: 43% or below
  • Upfront mortgage insurance premium (UFMIP): 1.75% of the loan amount
  • Customer Support: Good
  • Closing Costs/Points: Between 2 and 5% of the purchased price

FHA LOANSNavy Federal Credit Union

Navy Federal Credit Union has nearly 9 million active members. Its dedication to the military community is excellent.  If you are part of the military community and looking into an FHA loan, the Navy Federal Credit Union has to be your first call. 

  • FICO® score:   580
  • Down payment: 3.55%
  • Debt-to-Income Ratio: 45% or below
  • Upfront mortgage insurance premium (UFMIP): 1.75% of the loan amount
  • Customer Support: Great
  • Closing Costs/Points: Up to 3% of the purchased price

FHA LOANSBank of America

Bank of America has two types of mortgages that are available to low-income Americans:  The Affordable Loan Solution Mortgage offers a 3% down payment with no mortgage insurance required.  The Freddie Mac Home Possible mortgage also provides a 3% down payment, but it requires private mortgage insurance.  The Bank of America’s affordable mortgages are not FHA loans, so they have an upfront mortgage insurance premium (UMIP)

  • FICO® score:  600   
  • Down payment: 3.5%
  • Debt-to-Income Ratio: 36% or below
  • Annual Mortgage Insurance Premium: 0%*
  • Customer Support: Good
  • Closing Costs/Points:  Up to 3% of the purchased price

FHA LOANSCiti Mortgage

CitiMortgage is best known for conventional and jumbo loans, but the company also underwrites FHA loans.  They provide both digital and face-to-face support to potential homebuyers.

  • FICO® score:  580   
  • Down payment: 3.5%
  • Debt-to-Income Ratio: Between 36% and 43%
  • Upfront mortgage insurance premium (UFMIP): 1.75% of the loan amount
  • Customer Support: Good
  • Closing Costs/Points:  Up to 3% of the purchased price

The Bottom Line

A Federal Housing Administration loan is an affordable way to become a homeowner, but the product can be expensive.  For example, the mortgage insurance premium (MIP) can be as high as 1.75% of the purchased price annually.  

So, if you financed a 300k home, the MIP could cost as much as $5,250 ($300,000 x 1.75%).  Sellers and lenders may pay some of your closing costs.

The housing crisis a decade ago revealed lots of shady activities by brick-and-mortar banks and non-bank firms.  The government introduced new guidelines for lenders to follow, but homebuyers need to shop around and do their due diligence before choosing a lender.

BACK TO TOP
Continue Reading
Click to comment

Leave Comment

Advertisement
American Middle Class / Oct 25, 2022

How to Build Wealth: Start Your Own Business

The estimated reading time for this post is 567 seconds How Do You Build Wealth:...

American Middle Class / Sep 26, 2022

How Do You Build Wealth: Invest in Real Estate

The estimated reading time for this post is 436 seconds How Do You Build Wealth: ...

American Middle Class / Sep 14, 2022

What Does the Hot Inflation Report Mean for the Housing Market

The estimated reading time for this post is 100 seconds The benchmark 30-year fixed mortgage...