The Federal Housing Administration (FHA) loan program is one of the most popular financing options for first-time home buyers in Oregon. These loans are not limited to first-time buyers, but they are often well suited to this audience due to the low down payment and other factors.
Today, we will look at how FHA loans can benefit home buyers in Oregon.
What Is an FHA Loan?
FHA home loans are insured by the government, through the Federal Housing Administration (part of HUD). The full name of the program is the HUD 203(b) Mortgage Insurance Program. But they’re more commonly referred to as “FHA loans.”
In many ways, they are similar to any other type of mortgage loan. But it’s the government backing that makes them unique. A “conventional” mortgage, in contrast, is not insured or guaranteed by the federal government.
How Does the Program Work?
FHA does not lend money directly to borrowers. They simply insure the loans made by mortgage lenders in the private sector. So the first step is to apply for a loan through a mortgage company that has been approved to participate in the program (like us).
When home buyers in Oregon apply for an FHA loan, they go through a screening process that’s very similar to conventional or “regular” home loans. The lender will review your income, employment situation, debt-to-income ratio, and credit score (among other things). They will also have the home appraised to ensure it meets HUD’s minimum property guidelines.
Advantages for First-Time Home Buyers in Oregon
First-time home buyers in Oregon can benefit from using FHA loans. Two of the biggest advantages are the relatively small down payment and flexible guidelines associated with this program.
- Oregon home buyers who use an FHA loan to buy a house can make a down payment as low as 3.5%.
- Borrowers with credit problems in the past may find it easier to qualify for this program, compared to a conventional mortgage.
There are other benefits as well. For instance, borrowers who refinance their homes later on can take advantage of the FHA “streamline” refinance. As its name implies, a streamline refinance loan is designed to simplify the refinancing process. In fact, it can be completed without a property appraisal, which is typically required for a refinance loan.
You Have Other Mortgage Options Too
Many first-time home buyers in Oregon use FHA loans to buy a house, for the reasons explained above. But you have many other mortgage options to choose from as well.
For instance, some borrowers use conventional (non-FHA) home loans with a down payment of 20% or more, in order to avoid paying mortgage insurance. Military members and veterans can benefit from the VA loan program, which offers 100% financing.
Additionally, there are differences with the rate structure. Oregon first-time home buyers can choose between a fixed-rate loan and one with an adjustable rate that changes over time.
Learn more about your Oregon mortgage loan options.
Want to Apply for a Loan?
Sammamish Mortgage offers FHA loans to first-time and repeat home buyers in Oregon. We offer a wide variety of other mortgage products and programs as well. We have proudly served the Pacific Northwest for more than 20 years, and we welcome the opportunity to help you as well.