FHA Loan Options

There are three different types of FHA home loan options you may wish to consider when thinking about buying or refinancing a home.

New Purchase FHA Home Loans

New purchase FHA loans involve a minimum down payment of 3.5%, and require a credit check and appraisal of the property to be purchased with the FHA loan. In the case of condominiums or similar properties, the condo project must be on the FHA approved list or be added to it before the loan can be approved. In these cases, the lender can help get a property added to the approved list if it meets FHA criteria.

FHA Home Loan Refinancing Options

FHA refinancing loan options include cash out refinancing and streamline refinances. Cash out refinance loans involve a new appraisal regardless of the age of the property or when it was purchased, and they also require a credit check. Cash out refinancing allows cash back to the borrower for any purpose acceptable to the financial institution issuing the loan and borrowers should know that cash out refinancing isn’t limited to the company that issued your original home loan.

When it comes to streamline refinancing, borrowers should know this option is for existing FHA mortgages only and there is no cash back to the borrower. These types of loans have no FHA required credit check or appraisal, though your lender may require them anyway. Streamline refinancing loans are intended to help the borrower get into a lower monthly mortgage payment and/or interest rate, and it’s important to think carefully about adding extras to the loan such as energy efficient mortgage features or any permitted additional expenses.

Home Equity Conversion Mortgages or HECM Loans

The FHA HECM loan is designed for borrowers ages 62 and older who either own the property completely (the mortgage has been paid in full) or are very close to paying off their original mortgage loan. This type of mortgage features no monthly mortgage payment for qualified borrowers--the borrower gets either a line of credit, monthly payments, a lump sum or a combination of any of the above as part of the loan. The loan is repaid when the borrower dies or sells the property--the sale of the home pays off the HECM loan.