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Everything you need to know about FHA loans

Buying a first home is a dream for many individuals and families across the country. A space that you can customize to suit your needs and invite friends or family to is very desirable, especially for those who are looking to get out of renting. The extra benefit of homeownership is that you can build equity in the home the longer you live there, investing in your future.
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fha loans
Unfortunately, a home is one of the most expensive purchases that you will ever make. This is why most buyers will seek out a home loan to assist with the purchase. A home loan is simply borrowed money from a lender that allows the buyer to purchase the home and pay back the cost plus interest over an agreed-upon period. This tool makes it possible for more people to become homeowners.

What is an "FHA" Loan?

The Federal Housing Administration (FHA), which is a branch of the US Department of Housing and Urban Development, is a government entity that provides mortgage insurance to lenders who are giving out loans to riskier borrowers. Since FHA loans are backed by the government, FHA-approved lenders will lower their standards for approving borrowers that have lower incomes or lower credit scores. Lower FHA loan requirements help more people have access to funds that make buying their first home a possibility when they may not be able to qualify for conventional loans from private lenders.

Conventional Loans Vs FHA Loans

A conventional loan is defined as any mortgage loan that is not backed or insured by a government entity. While these types of loans are available to the vast majority of buyers, standards are a bit higher for who can borrow conventional mortgages. There is usually a higher credit score requirement and a deep dive into your debt-to-income ratio to ensure that you can pay back the loan. Mortgage lenders do not like to take on risks, so conventional mortgage borrowers must have a decent credit score and enough income to make the lenders feel confident.

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Types of Conventional Loans

Within this category, there are multiple types of mortgage loans. They are differentiated based on the loan amount, loan limits, and other factors. Here are the main mortgage loan categories that are still considered conventional.

Conforming Loans

Conforming loans are those that fall within the base conforming loan limit that is set by Fannie Mae and Freddie Mac. Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are non-government agencies that are regulated by the Federal Housing Finance Agency. These two organizations are the main drivers of the mortgage loan market. A conforming conventional loan is any conventional mortgage that is below the $726,200 loan amount limit, (as of 2023, some markets may differ).

Non-Conforming Loans

Loan amounts that are beyond that limit or are not backed by Fannie Mae and Freddie Mac. This includes mortgages that are above $726,000, but it also includes government-insured loans like VA loans or FHA loans. Nonconforming loans that are conventional have much higher loan limits.

Jumbo Loans

A jumbo loan is a name for a mortgage that is conventional but higher than the limit set by Fannie Mae and Freddie Mac. Jumbo loans are considered too risky by these entities since so much money is involved, making the potential for a loss to lenders increase. Plus, Jumbo loans have a far lower demand.

What to Know About FHA Loans

You might be wondering if you qualify for a loan insured by the Federal Housing Administration. There is a list of requirements that you can find if you scroll down this page a little further. However, let's break down some of the considerations that come into play if you want to apply for an FHA loan program.

Apply for an FHA Loan Today

Your journey toward homeownership starts here. Whether you have questions about how to apply for an FHA financing, how to pay closing costs, what monthly mortgage payment you can afford, or whether or not you can even get an FHA loan, District Lending has the answers. Learn more about FHA mortgage limits, requirements, and benefits in great detail below.

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Home Purchase
Why District
Read about all the benefits
Process overview
Simplified and easy to understand
Apply now
Start your application
Get a quote
See your rate with no commitment
Perks
Free refinance for 3 years
Refinance with no closing costs
No closing costs
Zero costs options, what it means
Realtor credits
Get .5% towards your closing costs
18 Day closing
2X more likely to get your offer accepted
Price match guarantee
We beat competitors’ rates by .125% or more
Rate defense
Never miss out on rates dropping
Refinance
Rates
Reviews
Hear from our customers
Contact
Answers within 2 business hours
Meet the crew
Our experts, mission, and values
Careers
Join us in making a difference
Blog
Our knowledge at your convenience
Mortgage secrets
Short videos with tips&tricks
Video library
A short description can be here
Calculator
Calculate your mortgage payment
Apply nowGet a quote