Lower Down Payment
FHA loan guidelines require a minimum 3.5% down payment, the lowest down payment available.
Easier Credit Qualifying
Credit requirements (FICO scores) are not as strict as is the case with conventional loans.
FHA Loans Are Assumable
Any FHA mortgage is fully assumable, which means that the seller of a property that currently has an FHA-insured mortgage can offer the financing and terms to the buyer. Assumability will be a huge benefit to a future seller when interest rates turn higher: not only will the sales price be higher because of the attractive financing, the pool of qualified buyers will be larger due to the lower monthly payment that comes with a lower interest rate.
FHA-insured mortgages have a refinance option that requires no appraisal. This option has allowed many homeowners to reduce their monthly payments even when their property was worth less than what was owed, a benefit that would not be possible with any other type of mortgage.
FHA’s 203K program lends money to purchase a property and rehabilitate it, with no payments due for 6 months. The 203K is the only loan of its type.
An FHA borrower unable to continue making their payments can petition for HUD assignment. If the default is due to circumstances beyond the borrower’s control and it’s possible to return the loan to performing status within a three-year period, HUD will defer foreclosure and take assignment of the mortgage. As part of the assignment, HUD can temporarily reduce or forgo mortgage payments.
Energy Efficient Mortgage (EEM)
The EEM allows an FHA purchaser to borrow up to $8,000 to make a subject property more energy efficient. Qualifying for this loan is not necessary. The loan proceeds can be used to purchase energy-efficient appliances, fixtures, insulation, weather stripping, and solar enhancements.
Anti-Flip Rule Eliminated
The FHA anti-flip rule (that in the past prohibited FHA from insuring a mortgage on a home where the seller owned the property for less than ninety days) has recently been eliminated. Fannie Mae and Freddie Mac require a 6-month waiting period for a buyer purchasing from an investor.