Buying a home for the first time can be overwhelming, especially thinking about the huge costs that come with it. However, it doesn’t have to be, there are programs available to first-time buyers that can help make the purchase more approachable.

One of the ways that makes purchasing a home more approachable is an FHA insured loan. FHA stands for Federal Housing Administration (who insures the loans), and the loan itself is issued by an FHA-approved lender. These loans are generally associated with first-time buyers because typically, the buyer can qualify with a lower credit score and can put less money down.

Along with the FHA loan, a buyer will also need to pay MIP (Mortgage Insurance Premiums). There is an initial MIP charge, calculated as a percentage (1.75% in 2020) of the base loan amount, which can be rolled into the loan or paid at closing. There is also a monthly PMI that is calculated based on the loan amount, length of the loan, and how much you put down. In 2020 the MIP was typically around 0.85% of the loan amount.

Source: Federal Housing Administration (FHA) Loan

To find out if you qualify for an FHA loan, or to see if an FHA loan is a good fit for you, start a conversation with your lender to see what would be best for you. Have a question about this article? Reach out directly to Sarah Leland, or leave your question or comment below!