Types of FHA Loans
Understanding FHA Loan/FHA Refinance Types And Limits
The FHA (Federal Housing Administration) has several FHA loan and FHA refinance loan options available to borrowers. As an FHA-approved lender, Capital Bank, N.A. is expertly versed in all types of FHA loans and can help you understand each and their unique benefits. When you’re ready to buy a home, trust us to find the perfect FHA loan to meet your needs!
FHA Loan Types
Here’s a brief overview of each type of FHA mortgage loan that is currently available.
- The FHA Fixed Rate 203(b) Mortgage. The most widely used FHA loan. Great for first-time homebuyers. Minimum down payment required. Reduced closing costs possible. No income requirements, but you do need to qualify with debt-to-income ratios. Rates are fixed and do not change over the lifetime of the loan.
- FHA Adjustable Rate Mortgage Loan. Also referred to as Section 251. Popular with those who want to keep initial payments low. Rates may change over the lifetime of the loan, but never more than 1% per year or 5% from your initial rate. Can be refinanced into a FHA Fixed Rate loan at any time. Closing costs and mortgage insurance (PMI) premiums may be financed into the loan.
- FHA Energy Efficient Mortgage. Also called FHA EEM. Allows homebuyers to include the cost of energy-saving upgrades in their FHA loan. No need to qualify, or provide a down payment, for the extra money needed for the upgrades. Available to anyone meeting FHA loan income requirements. Can be used for new or existing housing. Can be used in conjunction with FHA Section 203(k) rehab loans.
- FHA Section 203(k) Loan. Referred to as the Rehab Loan. Used for the rehabilitation and repair of single-family properties. There are restrictions on the type and condition of properties that qualify for the program. Speak with a Capital Bank, N.A. mortgage specialist for additional details.
- FHA Reverse Mortgage. Designed for homeowners 62 and up. Converts home equity into income or a line of credit. No income or credit qualifications but borrower must use the property as his or her primary residence. A property appraisal and consumer counseling for borrowers are required. This is a loan based on current interest rates that is paid back to the FHA lender once the home is sold.
- FHA Cash-Out Refinance Loan. Allows borrowers to convert equity into cash and/or lower monthly payments. Existing mortgage can be refinanced for up to 85% of the appraised value.
- FHA Streamline Refinance Loan. Allows for a quick refinance process resulting in an interest rate reduction. An appraisal is often not needed. Original loan must be an FHA loan in good standing in order to qualify, and the refinance must result in lower monthly payments. Available only to owner-occupied properties. No option to receive cash back.
- FHA Graduated Payment Mortgage. Good for homebuyers who expect their income to increase in the next 5-10 years. Payments can be tailored to grow as buyers’ income levels rise. Payments start small but increase annually. Must use the mortgaged property as a primary residence.
- FHA Growing Equity Mortgage. Tailored to first-time homebuyers and young families. Payments start small and increase gradually. As the payments increase, more is put towards the principal on the loan, which reduces the mortgage term. Open to anyone who expects his or her earnings income to increase significantly in the next several years.
- FHA Loans for Condominiums. Specific to condominium units. Encourages affordable lending for non-conventional forms of property ownership. Very similar in structure to FHA Section 203(b) loans. Low down payment; closing costs can be financed. Open to anyone meeting the loan qualifications and intending to reside in the unit.
FHA Loan Limits
The FHA has set loan limits for each state. These limits are separated by county and based on local market conditions. Separate limits are set for single-family, duplex, tri-plex and four-plex properties.
Contact your local FHA loan specialist at Capital Bank, N.A. at (866) 216-3577 or [email protected] to learn more about the FHA loan and FHA refinance types available to you, and the state specific limits that might affect your FHA mortgage.
At Capital Bank, N.A., you’re never just another number to us. We work with you on a one-on-one basis to get a thorough understanding of your situation and needs, and we never rest until we get you the best loan possible so that you can buy the home of your dreams!