FHA Insured Loans

FHA insured loans are one of the easiest types to qualify for and ideal for first-time homebuyers and borrowers who have challenging credit.
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Enjoy lots of benefits and few simple requirements.
Benefits
  • As little as 3.5% down
  • Better interest rates*
  • More lenient credit history*
  • Higher debt-to-income allowed*
  • Down-payment and closing costs can sometimes be covered with gift funds
  • Single-family homes, condos, multi-unit properties, and manufactured homes

*Compared with Conventional mortgages

Eligiblity
  • FICO® Scores as low as 580 may quality
  • Primary home financing only
  • Private mortgage insurance (PMI) is required (regardless of down payment)
  • National loan limit is $498,257 for single-family homes*

*Some counties have a limit greater than this, and you could potentially qualify for an FHA loan all the way up to $1,089,300 in some counties.

FHA vs. Conventional
FHA

An FHA loan is administered by the Federal Housing Administration (FHA) and is easier to qualify for than a Conventional loan. With the FHA guaranteeing the loan, lenders are more willing to approve applications, but FHA loans are usually more costly.

  • Down payments as low as 3.5%
  • Single-family homes, condos, multi-unit properties, and manufactured homes
  • Mortgage insurance is required
  • Entire down payment and closing costs can sometimes be covered with gift funds
  • Extra funding available for renovations and repairs with FHA 203(k) program
  • FICO® Scores as low as 580 may qualify
Conventional

Conventional loans conform to Fannie Mae/Freddie Mac guidelines and are a financial agreement between the lender and the borrower. Conventional loans are not government-backed, so may be harder to qualify for than FHA loans, but they typically have lower costs.

  • May offer lower interest rates
  • No private mortgage insurance (PMI) with 20% down payment. Shorter-term PMI with less than 20% down.
  • More expensive home purchases possible
  • Available as fixed-rate and adjustable-rate mortgages
  • Require minimum credit score of 620
  • Often require 20% down payment. Some gift funds allowed.
  • May require less documentation, and therefore take less time to process
Not sure if an FHA loan is right for you?
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Get an instant rate quote

  • No commitment
  • Fast and secure
  • Risk-free
All types of borrowers — and homes — qualify.

Because they’re backed by the government, FHA loans are one of the easiest types to qualify for. Embrace accepts FICO® Scores as low as 580 for certain purchase loans and offers down payment options as low as 3.5%. Plus, your entire down payment, including closing costs, can be covered with gift funds. Also, your debt-to-income ratio doesn’t have to be as low as with a Conventional mortgage, and reserve funds aren’t generally required. FHA loans are ideal for first-time homebuyers or borrowers who have challenging credit.

These loans are also a great option if you’re purchasing an older home or a fixer-upper. Through the FHA 203(k) program, you can finance the cost of the upgrades through your mortgage, instead of paying for repairs in cash or through more expensive options like a credit card or personal loan. Refinancing with an FHA loan is also possible. If your credit isn’t in the best shape but you want to save a little money, the FHA Streamline Refinance program might be the way to go. If you’ve kept up with your monthly payments for at least a year, you can apply for one without having your income, employment, or credit verified.

FHA and Conventional loans are the most common mortgages in the country. Both offer benefits, but there are many differences between them — and, depending on your situation, one may be preferable over the other. Understanding the requirements for each can help you figure out which loan is right for you.

Frequently asked questions

What does it mean to be pre-approved?
Pre-approval is more involved and carries more weight than pre-qualification.  With Embrace, this process will be as simple and streamlined as possible so you can start finding your new home. We’ll calculate the specific mortgage amount for which you are approved. You'll also have a better idea of the interest rate you will be charged on the loan and, in some cases, you might be able to lock-in a specific rate. With pre-approval, you will receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level. Obviously, this puts you at an advantage when dealing with a potential seller because it’s clear you are very close to obtaining the financing you need.

What is the difference between Embrace, my local bank, and a broker?
In short: no middle man. As a direct lender for Fannie Mae, Freddie Mac, and an approved issuer for Ginnie Mae, we underwrite our loans. We are not a broker or a lead reseller and we never take your call and then pass your application off to someone else. Your Embrace Home Loans Mortgage Specialist works directly with you through the entire loan process — from beginning to end. This kind of personalized service means we can truly get to know you, and provide impeccable service that perfectly fits your needs. It also means we can offer better interest rates and terms — all while keeping you completely informed with real-time, up-to-the-minute information regarding your loan. There’s simply no better way to go through the mortgage process.

What is an FHA insured loan?
FHA insured loans are mortgages that are insured by the Department of Housing and Urban Development — which means the government is essentially guaranteeing it will pay the mortgage if you cannot. FHA insured loans require a much lower down payment on a house than most other financers…usually just 3.5%. Plus, qualifying for an FHA insured loan is often easier than qualifying for a conventional mortgage — making it attractive for homebuyers and homeowners alike.

How is my credit score calculated?
Your credit score is calculated with a mathematical formula. It uses information in your credit report and compares it to information on tens of millions of other people. The resulting number is a highly accurate prediction of how likely you are to pay your bills. People with the highest credit scores get the lowest interest rates. Your credit score considers both positive and negative information in your credit report. Late payments will lower your credit score, but establishing or re-establishing a good track record of making payments on time will raise your score. Call 800-333-3004 to speak to a Loan Officer to get more information.

What is a home appraisal?
Getting a home appraisal is a standard part of the mortgage process. Lenders like Embrace will give customers a loan based on the appraisal value of the property they’d like to buy or refinance. Appraisals are conducted by 3rd party companies and are not influenced by Embrace Home Loans. Home appraisals are determined by comparing recently sold, comparable homes in the same neighborhood as your home or the home you are interested in purchasing or refinancing. The appraisal company provides a report to Embrace after the appraisal is conducted.  Quite simply, when you use a home for collateral for a loan, the lender wants an appraisal report to make sure the loan will be guaranteed by the value of the property.