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What Denver residents should know about FHA Loans People who are seeking to purchase their first house owe it to themselves to take a look at the FHA program Like any program, FHA does not work for everyone, but it has helped many first time homebuyers get their first house  Key Facts About FHA Mortgages  FHA is an acronym for the Federal Housing Administration which has several programs in place all geared toward the encouragement of homeownership The FHA allows participants to get loans for homes while providing less of a down payment when compared to a conventional mortgage You might wonder why banks would allow programs like FHA mortgages  Actually, banks love them because the federal government guarantees the loan  So even if the loan goes into default, the bank gets their money back  Who Qualifies For An FHA Mortgage? First time homebuyers love FHA because they provide the easiest loans to qualify for The FHA mortgage programs make it easier to qualify because of their less stringent credit score requirements and lower down payments  People can qualify for FHA loans with a 640  credit score and as little as a 3 Denver FHA  5% down payment as long as their debt to income ration is in line  More FHA Benefits  As well as a lower down payment and lower required credit score, there are other advantages that come with having a Denver FHA mortgage such as:  No prepayment penaly Denver Mortgage   Denver VA    A huge bonus for subprime applicants The FHA 203k program will fund specific home improvement efforts, allowing you to buy a house that may need some repairs without having to come out of pockt for the repairs FHA is much more willing to accept money you get as a gift to make your downpayment or cover closing costs With just a few restrictions, FHA loans are assumable, meaning that someone can take over your loan without have to go through the whole loan initiation process  So, Why Would You Not Choose An FHA Loan? FHA does put a limit on the size of the loan and the limit is determined by the local market In Denver, the current maximum loan is $406,250  As of April 9, 2012, FHA introduced a new requirement for private mortgage insurance (PMI)  PMI is 175% of total loan amount at closing and 115% yearly (divided into 12 monthly payments) for the first 5 years of the mortgage  PMI may not be required with conventional loans for those that are highly credit worthy  PMI helps keep the FHA solvent given their guarantees on loan defaults  PMI is the price of less stringent qualification standards  Denver FHA Mortgage Allows More Dreams to Be Fulfilled  Prior to the FHA, many people were shut out of home ownership because they could not scrape together the large downpayment and despite their best efforts could not achieve a high enough credit score FHA has its detractors but it is doing a good job of fulfilling its mission by making it easier for American\'s to purchase their first home