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What are the benefits of an FHA mortgage loan? There are many things that borrowers may view as helpful, more than may be viewed as pro-consumer, but what are the actual benefits of an FHA mortgage over other types of home loans?

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Benefits of an FHA Loan

July 14, 2021

Benefits of an FHA Loan
What are the benefits of an FHA mortgage loan? There are many things that borrowers may view as helpful, more than may be viewed as pro-consumer, but what are the actual benefits of an FHA mortgage over other types of home loans?

Benefits of FHA Loans: Low Down Payment

Your FHA mortgage does require a down payment, unlike USDA mortgages or VA loans. But FHA loans feature lower down payment requirements than certain conventional mortgages. The lowest down payment with an FHA mortgage is 3.5% unless you are building a home on your own land and use land equity as part of your down payment. Talk to a participating lender if you wish to consider that option.

FHA loans further enhance the low down payment requirement by allowing down payment assistance from approved sources.

Benefits of FHA Mortgages: Multi-Unit Homes

Did you know you can purchase property up to four units large with an FHA mortgage? This is possible for those who intend to live in at least one of the units as their home address. FHA loans require occupancy, but you are free to occupy some of the units in the home and rent out the unused ones.

FHA Loan Benefits: Options to Purchase, Build, Or Renovate

An FHA Single-Family home loan lets you buy existing property with a low down payment. These loans can also help you buy a fixer-upper home and renovate it with the same kind of low down payment requirement. FHA mortgages are also available, even for first-time home buyers, that let you build a home from the ground up.

FHA Loan Benefits: Early Payoff Without Penalties

Some people think “early payoff” refers strictly to paying off the mortgage over the full 15 or 30-year loan term. But what about those who pay off early by refinancing the loan? Some conventional mortgages feature early payoff penalties, but FHA loans are required by law to be issued without such early payoff consequences.

FHA Loan Benefits: Consumer Protections

One feature of FHA mortgages that functions as both consumer protection and a tangible benefit for the borrower is a requirement that, in order for a home to be approved for an FHA mortgage, it must have a “remaining economic life” for the full duration of the loan term. 
That means the home must be deemed suitable to re-sell at any point during the mortgage. If the home’s basic condition would not support a remaining economic life for the full term of the loan (up to 30 years maximum), it would not be approved for an FHA home loan.

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