An FHA mortgage is a government-backed home loan with more flexible lending requirements than those for conventional loans. Because of this, interest rates for FHA mortgages may be somewhat higher, and the buyer may need to pay monthly mortgage insurance premiums along with their monthly loan payments. FHA loans are available with fixed rates or as adjustable-rate mortgages.

FHA loans are insured by the Federal Housing Administration (FHA) and may have an easier qualification process due to less stringent down-payment and credit requirements than conventional mortgages. Note: If you're a current military member or veteran, you may be eligible for a VA home loan with little or no down payment.

  Benefits and Considerations

• Lower Down Payments - An FHA mortgage may require a down payment as low as 3.5 percent, although the interest rate may be somewhat higher than with a conventional mortgage.
• Lower Credit Thresholds - One of the benefits of the FHA loan program is that home buyers may qualify even without a long credit history or outstanding credit.
• Popular for Refinancing - Many borrowers with newly adjusting ARMs look to refinance into fixed-rate FHA loans.

  Requirements and Qulaifications

• Loan Amount - FHA home loans have maximum mortgage limits that vary by state and county.
  
• Down Payment - FHA loan guidelines require a minimum down payment of 3.5 percent.
• Property Condition - FHA loans require that the home being purchased must meet certain conditions and be appraised by an FHA-approved appraiser. New FHA loans are available only for homes that will be used as the buyer's primary residence.

An FHA mortgage may be a good fit if you have less-than-stellar credit or limited cash for a down payment, but other options exist. Compare mortgage options to learn more on your own, or contact a mortgage loan originator to find out which mortgage option is the best fit for you.

Loan payment example: On a $152,625 loan ($150,000 base amount plus $2,625 for prepaid mortgage insurance) with a 3.5% down payment for 360 months at 4.00% interest rate, monthly payments would be $896.06. No customer paid closing costs, APR is 5.489%. This payment example does not include amounts for taxes and insurance premiums. The monthly payment obligation will be greater if taxes and insurance are included and an initial customer deposit may be required if an escrow account for these items is established.

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice.

The rates shown above are sample rates for the purchase of a single-family primary residence based on a 60-day lock period. These rates are not guaranteed and are subject to change. This is not a credit decision or a commitment to lend. Your guaranteed rate will depend on various factors including loan product, loan size, credit profile, property value, geographic location, occupancy and other factors.

To guarantee a rate, you must submit an application to Austin First Mortgage and receive written confirmation from a mortgage loan originator that your rate is locked. Application can be made online.

FHA Loans - APR calculation assumes a $153,918 loan ($150,000 base amount plus $3,918 for prepaid mortgage insurance) with a 3.5% down payment and borrower-paid finance charges of 0.862% of the base loan amount, plus origination fees if applicable. The monthly payment shown here does not include the FHA-required monthly mortgage insurance premium.