FHA Loans in PA ( Pennsylvania )

Who can apply for an FHA loan in Pennsylvania?

The Federal Housing Administration (FHA) has administered a loan program for homebuyers since 1934. A division of the U.S. Department of Housing and Urban Development, the FHA makes home-buying loans available to first-time buyers and other qualifying individuals.

If you want to apply for FHA loans in PA or are concerned about credit score requirements, speak with one of the professionals to see if the FHA loan program is right for you.

What is the difference between FHA loans and conventional mortgage loans?

FHA home loans are not that different from conventional mortgage loans. The Federal Housing Administration does not technically lend money. Rather, they provide mortgage insurance for a loan funded by an FHA-approved lender such as a bank or mortgage company.

This guarantee by the federally-backed program greatly increases the borrowing ability for many first-time applicants. Once the FHA-approved loan is distributed, it is repaid to the lender through monthly mortgage payments.

fha loan pennsylvania

Advantages of an Pennsylvania FHA loan

FHA-approved loans have numerous advantages and annually help over one million families buy a home. Some of the advantages of an FHA loan in Pennsylvania include:

  • More flexible credit qualifications: FHA loans have a minimum credit score requirement of 500 where the applicant has a 10% down payment and a minimum of 580 with a 3.5% down payment. This is considerably lower than most commercial lenders. Further, the FHA will consider factors outside an applicant’s credit score and then will approve FHA loans in PA. 
  • Higher allowable debt-to-income ratio: Unlike conventional lenders, FHA loans allow applicants to have a higher debt-to-income ratio. 
  • Reduced waiting periods: Applicants with past bankruptcies or foreclosures face longer waiting periods when applying for a conventional loan as opposed to a PA FHA loan. 
  • Lower down payments: FHA loans allow for down payments as low as 3.5%. 
  • Relaxed rules on gifting: The FHA loan programs allow for a third party to make the down payment. This third party can be a family member, friend, employer, or nonprofit organization. 
  • Non-occupant co-borrowers allowed: Under most conventional loan terms, co-borrows must be occupants of the property. This precludes, for example, a parent signing as a co-borrower. FHA programs allow for non-occupant co-borrowers where this is a familial relationship or other long-standing relationship between the borrowers. 
  • No early payoff penalty: Unlike many conventional mortgage loans, FHA-approved loans are prohibited from imposing early payoff or refinancing penalties. 
  • Financed closing costs: Unlike with many conventional loans, closing costs can be rolled into an FHA loan through lender credits. 
  • Multi-unit homes allowed: FHA-approved loans are also available for the purchase of multi-family units where the borrower intends to reside in one of the units. This leaves the other units available for rental.

Disadvantages of an Pennsylvania FHA loan

While FHA loans in PA have many advantages, they are not for everyone. Some of the possible disadvantages of the FHA loan program include:

  • Upfront insurance. Generally, mortgage insurance is required when your down payment is less than d20% of the purchase price. While the FHA mortgage insurance allows applicants to qualify for a loan, it also comes with an upfront percentage cost. 
  • Primary residences only. While conventional loans are available for second homes, investment, or commercial properties, FHA-approved loans may only be used to purchase primary residences. 
  • FHA loan limits. The Department of Housing and Urban Development sets a maximum loan limit for every county in the United States. These limits are based on median home prices in the area and are reviewed annually. 
  • Less competitive. In competitive real estate markets, a seller may receive multiple offers for a single listing. Some sellers may find FHA applicants less attractive. 
  • Property standards.  To qualify for an FHA loan, a property must meet certain minimum standards for safety, security, and soundness. Any deviation from these standards will be revealed in the critical appraisal.
It is essential to consider all the vital parameters before deciding to take an FHA loan. Prospective home buyers must take all the advantages of these types of PA FHA loan requirements.

Need an ideal choice for a FHA loans in PA? Contact our experienced professionals.

If you are a first-time homebuyer or have less than perfect credit, you may qualify for an FHA-approved loan. Contact Dynamic Funding today and talk to one of our experienced staff about FHA-approved loans in Pennsylvania.