Understanding FHA Loans: A Guide for Raleigh Homebuyers

For many prospective homeowners in Raleigh, NC, the path to purchasing a home can seem daunting, especially when considering credit scores and down payments. Fortunately, Federal Housing Administration (FHA) loans offer a more accessible route to homeownership and The Raleigh Mortgage Team at Certified Home Loans is here to help.​

What Are FHA Loans?

FHA loans are government-backed mortgages insured by the Federal Housing Administration. Designed to assist first-time and low-to-moderate-income homebuyers, these loans come with more lenient qualification criteria compared to conventional loans.​

Benefits of FHA Loans

• Lower Down Payments: Borrowers can secure a home with as little as 3.5% down, making it easier to enter the housing market.​

• Flexible Credit Requirements: Individuals with credit scores as low as 580 may qualify, and those with scores between 500-579 might be eligible with a 10% down payment.​

• Competitive Interest Rates: FHA loans often offer favorable interest rates, potentially resulting in lower monthly payments.​

• Assumable Loans: FHA loans can be transferred to a new buyer, which can be advantageous if interest rates rise.​

FHA Loan Requirements

To qualify for an FHA loan in Raleigh:

• Credit Score: A minimum of 580 for 3.5% down; 500-579 requires 10% down.​

• Debt-to-Income Ratio: Generally, a DTI ratio of 43% or lower is preferred.​

• Primary Residence: The property must be your primary residence.

• Property Standards: The home must meet HUD’s safety and livability standards.​

What Are HUD’s Safety and Livability Standards?

When applying for an FHA loan, the property must meet HUD’s Minimum Property Standards (MPS) to ensure it is safe, structurally sound, and livable. These guidelines require that the home has essential utilities such as electricity, water, and heating in working order, a roof in good condition, safe access to the property, and no visible hazards like exposed wiring, mold, or lead-based paint. Additionally, the structure must meet local building codes and be free of significant damage or deterioration. During the appraisal process, an FHA-approved appraiser will inspect the property to confirm it meets these standards before the loan can be approved.

Is an FHA Loan Right for You?

FHA loans are ideal for:​

• First-Time Homebuyers: Those entering the housing market for the first time.​

• Limited Savings: Buyers who haven’t accumulated substantial savings for a down payment.​

• Credit Challenges: Individuals working to improve their credit profiles.​

However, consider that FHA loans require mortgage insurance premiums (MIP), which can increase overall loan costs.

Local Assistance in Raleigh

The City of Raleigh offers homebuyer assistance programs, providing eligible applicants with low-interest loans up to $20,000 to cover down payments and closing costs. These programs can be combined with FHA loans to further ease the financial burden of purchasing a home.

How Certified Home Loans Can Help

At Certified Home Loans, we specialize in guiding Raleigh residents through the FHA loan process. The Raleigh Mortgage Team is dedicated to finding the best mortgage solutions tailored to your unique financial situation.​

Ready to take the next step? Apply Online or Contact Us today to explore your FHA loan options.