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An FHA fixed rate mortgage has the same interest rate for the life of your home loan, which means your monthly P&I payments won't change.

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Fixed Rate Mortgage

FHA Fixed Rate Mortgage

As the name would suggest, the interest rate on a fixed rate mortgage stays the same throughout the life of the loan, and consequently, so do the minimum monthly payments.

The FHA’s fixed rate mortgages are a popular option for many homebuyers as they come with the same flexible guidelines as other FHA programs, namely the 3.5% down payment requirement and 580 minimum credit score. The fixed rate mortgages have either 15 or 30-year terms. While 30-year terms are the most popular, 15-year fixed rate mortgages typically have lower interest rates with higher monthly payments, but more of the money goes toward the principal every month.

Eligibility

In order to qualify for an FHA fixed rate mortgages, it’s important you know the basic requirements:

  • Your debt-to-income ratio must fall at or under the FHA’s maximum qualifying ratio of 43%.
  • You must have a credit score of at least 500.
  • You qualify for a 3.5% down payment if your credit score is 580 or higher, or a 10% down payment if your credit score is between 500-579.
  • The house you buy must be a 1- to 4-unit structure that serves as your primary residence and meets the FHA’s minimum property requirements.

The Pros

A fixed rate loan can be a surefire choice for many borrowers because of the certainty it comes with.

  • A fixed rate loan means no surprises. You know exactly what your monthly payment is going to be for the life of the loan, making it easier for you to budget your income.
  • Borrowers with fixed rate mortgages are protected from the uncertainty of a fluctuating market. Even if interest rates skyrocket, your rate is locked in for the entire term.
  • The fixed rates make it easier to shop around for loans, because you can simply calculate your monthly payments and make the best choice.

The Cons

The inflexibility of fixed rate mortgages may not work out for all homebuyers.

  • With fixed rate loans, timing can work against you. You may feel you’re getting a low rate at closing time, but a few months down the line the rates may drop further.
  • Refinancing for a lower rate may be expensive and ultimately cost you more in the long run.
  • Fixed rate mortgages generally have higher interest rates than ARMs, and if you end up selling or refinancing in the first few years, your interest payments would have to be higher.
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About the One-Time Close Constuction Loan
The interest rate for a fixed-rate mortgage stays the same throughout the life of the loan, and consequently, so do the minimum monthly payments.
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FHA Loan Articles

One-Time Close Construction Mortgages vs. Two-Close Loans

Did you know there is an FHA loan option that lets you build a house from the ground up? You can use this mortgage to build on land you own or on land you buy as part of the loan. But you will want to address some issues comparing construction loan options.

FHA Loans, Appraisals, and Excess Land

Sometimes when buying a home there may be a question of surplus or excess land. You likely won’t face this issue when buying a condo unit, but for other types of purchases, this may be an important factor in the appraisal process.

FHA Loan Income Rules to Consider Before Applying

Your lender is required to make sure you can realistically afford your mortgage, and that means verifying that your income is stable, reliable, and will continue after your mortgage has closed. What some don’t realize about this process is that there are standards for verifying income.

Questions to Ask About an FHA Home Loan Before You Apply

Planning your FHA loan means asking some important questions early in the process.  The most obvious question is associated with the type of home you want. How large a house do you need? FHA mortgages allow the purchase of homes with between one and four living units.

Ready To Apply for an FHA Loan?

Before you get ready to commit to a home loan application, it’s good to review your circumstances and ask a few basic questions about your loan, your plans, and the home itself. Believe it or not, knowing what type of home loan you need is an important step.

FHA One-Time Close Construction Loans: Issues to Consider

It’s a great option to consider if you want to build your dream home on your own land instead of buying someone else’s already-lived-in house. FHA One-Time Close mortgages are also referred to as single-close construction loans--you’ll see these terms used interchangeably.


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