I was recently asked by someone “what are the advantages of getting an FHA loan”? and after giving a couple of advantages, I thought it might be helpful to make a short list of advantages of getting an FHA loan vs other loan options.
5 Advantages To FHA Loans
- Usually, the 30 year fixed rate for an FHA loan is lower than conventional loans (usually!)
- FHA loans never have a prepay penalty
- Qualifying guidelines are less restrictive than other loan types – for example, you can have a 585 credit score and still possibly qualify for an FHA loan
- The down payment requirement of 3% (3.5% as of January 1, 2009) is lower than the conventional down payment requirement of 5%
- If you currently have an FHA mortgage, if interest rates drop, you can participate in the FHA streamline program and take advantage of lower rates without having to fully re-qualify for a new loan.
Are there other advantages to having an FHA loan? Probably, but these are 5 simple advantages that came to mind this week. With the reduction of loan programs over the last year, it is no wonder that many people are choosing to obtain an FHA-insured mortgage.