How Does an FHA Loan Work

[Chris Cozzens]

Hey Guys,

Could someone provide details on how exactly an FHA loan works?

What sets this type of loan apart from others?  How do you qualify? Does this loan count toward your "loan limit"? 

Any insight would help tremendously! 

Thanks,

Chris

[Alexander Flores]

@Chris Cozzens FHA loan is like a regular mortgage except you are only putting down 3.5% instead of the traditional 20% down payment. This means your mortgage payment is higher than if you put 20% down and you also pay something called PMI (another payment tacked onto your mortgage for not owning 20% of the houses' worth). You also promise to live in the home for at least a year.

An FHA 203k loan is very similiar except there can be repair costs put into the loan amount.

I have been preapproved for them before. At a 200k purchase price of a house in central jersey(where I am from) the total payment with taxes and insurance was estimated at around $1600. 

FHA is a great option to house hack with or get started if you do not have a large sum of cash. Hopefully this helped.