Federal Housing Administration (FHA)

Unlike conventional loans, which are not guaranteed by the government, FHA loans are backed by the Federal Housing Administration and only offered by FHA-approved lenders. MiMutual Mortgage is an FHA approved lender. FHA loans are considered less risky than conventional loans and can qualify borrowers with lower credit score and smaller down payments.

Conventional loans can offer better terms for borrowers with good credit and larger down payments. The PMI can also be canceled once the equity is at 20% of the loan, or if 20% down payment is made. Mortgage insurance is mandatory with FHA loans regardless of the down payment. However, if you put at least 10% down, you only pay mortgage insurance premium for the first 11 years of the loan.

FHA mortgage loans require the home to meet minimum national or state building code standards set by the Department of Housing and Urban Development (HUD). In order for the loan to be approved, the house must meet safety, security and soundness standards to ensure the home is livable. For example, if the home is too close to a potential hazard, such as high voltage electrical wires or a high-pressure gas line or located in a natural disaster area where insurance isn’t available, the loan might not get approved. The home itself must not have any structural issues such as an unstable foundation or a roof ready to cave in.

Homes must also be a primary residence and cannot be used as rentals.

Qualifying factors can vary, but in general, MiMutual Mortgage requires a minimum credit score of 580 and at least a 3.5% down payment. You must be able to prove steady income, provide proof of employment and not exceed Debt-To-Income Ratio (DTI) maximums. You must occupy the home as a primary residence. Eligible property types include: 1-4 unit residences, new construction, manufactured homes, townhouses, and modular homes.

Yes! If your dream home is not perfect, it may require repairs for an FHA approval. MiMutual Mortgage offers the FHA 203(k) Limited and 203(k) Standard loans for just this situation!

203(k) Limited: This is limited to minor repairs

• Cost of improvements from $5,000 to $35,000 maximum
• Safety, Soundness and Structural repairs and NOT permitted
• Repairs requiring and architect are NOT permitted

203(K) Standard: Allows for major rehabilitation

• No maximum dollar amount on the cost of improvements.
• Can be used for Safety, Soundness and Structural repairs.
• 5 total disbursements will be made: 4 during construction and final draw upon final inspection.

Yes! If you currently have an FHA loan, you can either refinance for a better rate/term or obtain an FHA Cash-Out Refinance loan. You must have had your loan for at least 210 days and made at least 6 on-time mortgage payments. Refinancing your current FHA loan with a new FHA loan allows for a streamlined, faster loan process. You may have the appraisal waived and there is less paperwork, saving you time and money!

With the increase in home values over the last couple of years, many people are taking advance of the equity in their home and ‘cashing-out’. The money can be used however you see fit, but most people use it to pay off high-interest debt or fund a major purchase.

Also, another option is that you may want to refinance your current FHA loan into a Conventional loan. If your credit score and income meet the requirement for a conventional loan, you could save money in the long run by dropping the FHA’s Mortgage Insurance Premium.