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FHA Loans

FHA loans, or Federal Housing Administration loans, were created by the FHA to make home owner a possibility to more people. Being backed by the FHA makes them a safer loan to lend out. The FHA loan was created during the Great Depression as a way to jump start the housing industry and is still around today. The main advantage of a FHA loan is that they require a much lower down payment then your typical conventional loan. FHA loans have down payments of 3.5%. Down payments typically are one of the main reasons people don’t purchase a home.

This table will show difference between down payments for a typical conventional loan and a FHA loan in Somerset County and Morris County in New Jersey at the beginning of 2012.

County Average home price (2012)  Down payment with typical conventional loan of 20% Down payment with FHA loan of 3.5%
Somerset $401,900 $80,380 $14,066
Morris $458,200 $91,640 $16,037

As you can see with a FHA there is a big difference in how much money you need for a down payment, making home owner a possibility for more people. The advantage of a FHA loan over other government loan programs like VA loans or USDA loans is that pretty much anyone can qualify. Beyond the advantage of lower down payments there are looser financial requirements. You do need decent credit, but you don’t need perfect credit. There are loan limits with a FHA loan, it varies from county to county but for example in Somerset County it is $729,750 with the same limit is Morris County which is a good amount higher then the average home price. Some counties have lower limits, just contact us and we can let you know what the FHA loan limits are for an area you are looking to live in.

FHA loans also offer refinance programs. Take advantage of historic low rates and lower your monthly mortgage payments. A FHA streamline refinance is a great option it’s called a streamline because it lets you reduce your current interest rate quickly and often times without an appraisal. It also eliminates a lot of paperwork that must be completed by a lender which saves you valuable time and money. Another FHA refinance option is a cash out refinance. It lets you refinance your existing mortgage by taking out another mortgage for more than you currently owe. This option is very attractive to anyone who has a property that’s increased in value since the home was purchased. Then use the extra cast for any need you may have.

The FHA loan is a great option, to find if it’s right for you:

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We also specialize in the following New Jersey Loan Programs: