What is a Minnesota FHA Loan?
A Minnesota FHA Loan is a mortgage backed by the Federal Housing Administration (FHA) that has been made available to qualifying applicants in the state of Minnesota. FHA loans are advantageous to prospective home buyers for a variety of reasons, including their lenient credit requirements. In the broad view, FHA loans function as follows: an applicant desires a home, but can't afford to buy it via cash, and also may not have the kind of good standing credit required to take out a traditional home loan. The government, represented by the likes of the FHA and HUD (Department of Housing and Urban Development), helps broker a mortgage between the aforementioned applicant and an approved lender. FHA mortgages, being government-backed, are attractive to lenders because there's no chance of them losing money in the case of a default. The mortgage is likewise attractive to applicants because, as part of a good-will government initiative, FHA loans are offered with exceedingly lenient terms to promote home ownership among less fortunate prospective buyers. Below, we at Online Loans have broken down the assorted information available across the web into a convenient need-to-know to make getting you FHA loan as simple as possible. You can also check out our mortgage calculator to get a closer sense of the costs of a home loan.
The requirements put forth by the FHA for FHA loan eligibility are as follows: 580 credit score for a 3.5% down payment, 500 credit score for a 10% down payment, proof of employment / steady income, and an FHA home appraisal of the desired domicile (check out our definitive guide to rebuilding your credit). Importantly, the home can't be a second or vacation home. Finally, the applicant doesn't need to be a citizen, just a legal resident of the US.
There is a special sub-type of FHA loan known as a 203(k) FHA loan which is designed to help prospective buyers complete necessary rehabilitation on the desired property with funds allocated via the same FHA loan facilitating the overall purchase. This is achieved by FHA appraisers valuing the home as if the rehab had already taken place for the purposes of deciding the total amount of the mortgage to be lent.
Interest rates on government-backed FHA loans in Minnesota tend to hover around 3.5% - 4.5% APR. That being said, differences in the length of the loan, as well as which lender is providing the loan, can lead to small variations in that rate.
One important note about interest rates as they relate to FHA loans is that they are fixed, meaning that, over the lifespan of your loan, the rate will not change from the initial percentage set at signing.
Maximum ($) Limits - By County
Each state's FHA loan maximums are set by HUD on a per-county, per-home-type basis. The interactive table below has been populated with the most current data regarding FHA loans maximums for your researching convenience.