FHA Loans
Georgia
Buying a house in Georgia can be expensive, and most first-time homebuyers rely on home loans to finance their purchase. However, the most popular option, conventional loans, may be out of reach for many prospective borrowers. Lenders impose strict qualification standards to minimize risk, making conventional loans less accessible and often not the most affordable financing options.
The solution? Georgia FHA loans. If you hope to buy a house in Georgia but are not sure you qualify for conventional loans, FHA loans can help you accomplish your dream of homeownership.
What Are FHA Loans?
FHA stands for Federal Housing Administration. This entity is a branch of the US Department of Housing and Urban Development. The FHA provides backing for mortgage products so lenders can relax their qualification standards, allowing more borrowers to become eligible for homeownership. These mortgage products are collectively known as FHA loans.
Georgia FHA loans are especially helpful to the Peach State’s significant BIPOC community, which constitutes over 45% of the population. These home buyers are more likely to have low credit scores and significant debt burdens that can disqualify them from other forms of financing. Additionally, Georgia’s 425,000 LGBTQ+ individuals often face major challenges, such as educational debt burdens and low FICO scores, which can cause serious trouble when applying for loans.
In 2023, over 30% of all FHA loans were awarded to BIPOC borrowers, which is significantly higher than the approval rates for other products. Over a quarter of a million Black and African American people have become a first-time homebuyer in the last three years thanks to this program.
A Georgia FHA loan is an excellent option if you struggle to meet the requirements for a conventional mortgage. For example, you may not have the credit score, down payment requirement, or debt-to-income ratio many lenders want to see from conventional loan borrowers. With home prices rising more than 4% in the last year in Georgia, you need all the help you can get. With an FHA loan, home ownership is more accessible.
Benefits of Federal Housing Administration Loans in Georgia
While the majority of LGBTQ+ borrowers use conventional loans to finance their purchases, they may be missing out on the many advantages of FHA products, especially for those with less-than-perfect credit.
FHA loans offer several benefits to homebuyers in Georgia. These loans can make homeownership more affordable, particularly for those who might struggle to meet the stringent requirements of conventional mortgages. Here are the key advantages of Georgia FHA loans.
Small Down Payment Options
The minimum down payment for a Georgia FHA loan is 3.5%. That means you must save up at least 3.5% of the home’s sales price to acquire an FHA loan, which does not include closing costs. The larger your down payment, the lower your monthly payments and total loan amount.
While Georgia is quite affordable, with an average sales price of $333,862, even 3.5% can feel insurmountable to those who have significant debt or low savings. Thankfully, we can match you to down payment assistance programs at the state, local, and national level. Not only does this include the Georgia Dream program mentioned above, but also smaller ones for more specific needs.
These programs include grant and down payment loan options depending on your specific needs. We ensure that eligible homebuyers receive all the funding they are entitled to.
Competitive Interest Rates
If you are interested in an FHA loan in Texas, then you should understand the benefits of this option. Here are a few advantages Texas homebuyers will experience with FHA loans.
Flexible Underwriting Guidelines
Underwriting is the process of evaluating a borrower’s risk. Since these borrowers are in more precarious financial situations, most applications are underwritten manually. What loan officers look for during the underwriting process is usually more flexible with FHA loans, whereas a conventional product would have more strict requirements.
Assumable Mortgages (Buyer Can Take over Existing FHA Loan)
An FHA mortgage on a house in Texas may be eligible as an assumable mortgage for a new buyer. Essentially, instead of taking out a new loan to buy a house, you take over the debt and payments for an existing FHA mortgage and become the new owner of the house. This is an excellent option for people with spotty credit reports.
FHA Loan Requirements
Every lender will have their own requirements for the FHA program. However, the typical Texas FHA loan requirements are as follows.
Minimum Credit Score
To qualify for an FHA home loan, you should aim for a credit score of 580 or better, as they will allow you to access the best rates and lowest upfront expenses. Lenders approving FHA mortgages may allow for scores as low as 500 if they offer at least 10% upfront.
Down Payment Amount
As mentioned previously, the minimum down payment for an FHA mortgage is 3.5% for those with a score of 580 or greater; those with scores between 500 and 579 must make a minimum payment of 10%. Although this is a low down payment and makes homes more affordable, it also means you would pay a private mortgage insurance premium (MIP).
We understand that even 3.5% can feel like a challenge depending on your personal finances, but Pride Lending is here to assist. We’ll connect you with local, state, and nationwide down payment assistance programs that can provide you with grants or second liens.
Numerous organizations in Texas offer assistance for those who can’t afford their upfront costs. For example, you may choose DPA programs from the Texas State Affordable Housing Corporation (TSAHC) or the Texas Homebuyer Program from the Texas Department of Housing and Community Affairs.
Debt-To-Income Ratio (DTI)
DTI compares your monthly debt payments to your gross monthly income. You divide your debt total by the gross income each month and then multiply by 100 to get a percentage. The typical lender will require a maximum DTI of 43%. Lenders can make an exception to a maximum DTI of 57% if the borrower has a good credit profile and provides a larger down payment.
Property Standards
Since the government is backing this mortgage, approval for the property type is needed before the loan is given. An appraisal will ensure the property is safe to occupy and up to standards for liveable conditions.
Additionally, this home must become your primary residence to qualify. However, it is possible to purchase a property with up to 4 units and rent up to 3 units, as long as one is used as your permanent residence.
Mortgage Insurance Premiums (MIP)
Everyone, no matter how much they put down, needs to pay the upfront mortgage insurance premium, which is 1.75% of the loan amount. You’ll also have to pay ongoing annual mortgage insurance premiums, though this may not be for the entire length of the loan.
If you make a 10% down payment or more, the MIP will be removed after 11 years, but if you make less than this, you’ll have MIP for the entirety of the loan. It’s also possible to refinance into a conventional loan once you have 20% equity, which would remove mortgage insurance.
Georgia FHA Loan Limits
FHA loan limits depend on the county you live in and the state of the housing market. Typically, the highest loan limit is in the hottest market in Georgia. FHA loan limits also depend on the type of house you buy, such as a single-family home or multi-family home. The loan limits in most counties in Georgia for single-family homes are the same, but there are some variations.
Fulton County – $649,750
Gwinnett County – $649,750
Brantley County – $498,257
Clarke County – $546,250
DeKalb County – $649,750 [2]
The FHA Loan Process
If you qualify for FHA loans, Pride Lending has a simple process to get you started on your Georgia dream loans. Whether you are a first-time homebuyer or have owned a home at least three years prior, you can follow the steps below to qualify for an FHA loan.
See if you meet the requirements
Evaluate if you have a credit score of 580 or greater, a DTI of 43% or lower, and that you meet the down payment requirement of 3.5%. You may still qualify if you have a score as low as 500 or a DTI of 57%, but this may limit your choices.
Contact Pride Lending
When you reach out to us, we’ll begin your loan consultation by reviewing your options with you. FHA-approved lenders are qualified to give out these mortgages, and finding the right loan partner is the key to a positive homebuying experience.
Apply and get pre-approved
Pre-approval will prepare you for a smoother buying experience and help you understand what you can afford. You will need many documents for your application, including tax returns, paychecks, and bank statements.
Shop for the perfect home
Once you’ve been preapproved, we’ll discuss your budget with you and send your preapproval letter to your realtor. You can then begin shopping for the right property in your area.
Submit an offer
You and your realtor will decide on a competitive bid and submit the letter to the seller.
Complete the application
The application is called the Uniform Residential Loan Application and will include many of the same details you needed for preapproval; however, it will also include property details, which the lender will use to determine whether the property meets their standards.
Offer acceptance
The seller will decide if they find your offer acceptable. If they do, then you’ll sign a purchase contract that tentatively agrees to buying the home.
Inspection
While not strictly necessary for the program, the lender will likely require you to have the property inspected, ensuring that there are no significant issues.
Conditions
If you’re happy with the inspection results, then our team at Pride Lending will walk you through the sales contract and make sure everything is correct.
Underwriting
We will submit all the details that you have provided to the lender, whose underwriting team will now take over. They will carefully investigate each facet of the loan and ensure that there are no issues with you or the home.
Appraisal
An approved appraiser will evaluate the property to determine if it is a fair value, is safe to live in, and meets the property requirements for FHA home loans.
Loan approval
Once the appraisal is complete and the details of the loan have been reviewed, the lender will proceed with the final approval of your loan so that you can close on the transaction. We will schedule the closing date with you and the title company will send the information regarding how to pay the upfront expenses.
Close on the home
All the documents will be signed, the title will be transferred to you, the closing costs will be paid, and you will become the new owner of that house with the help of an FHA home loan.
Why Choose Pride Lending for Your Texas FHA Loan?
When you need the right team on your side to navigate the Texas FHA program, a loan officer from Pride Lending is ready to help. We serve all our clients with the same care, offering excellent customer service and a streamlined application process to make homeownership affordable and accessible.
Our team is composed of allies and members of minority communities, including LGBTQ+ and BIPOC individuals. We’re here to help everyone, no matter their identity, and serve as an advocate for those who may feel underserved by the mortgage industry.
First-time homebuyers and repeat buyers alike can work with Pride Lending whether they want to buy a single-family home or learn about an FHA reverse mortgage. Call us today at 725-231-0192 to learn more about Texas FHA loans.