It looks like you're using an outdated browser.
For a better experience, we recommend switching to a more modern browser like Google Chrome or Microsoft Edge. Learn more.
Online Banking Login

News & Tips

FHA Loans: What to Know Before You Apply

July 7, 2021 by Space Coast Credit Union



It’s not always easy to save up for the large down payments that some types of mortgages require. The good news? There are other loan options that can help you reach your homeownership goals. Our FHA loans, which are insured by the Federal Housing Administration, can be a smart choice if you’re looking for smaller down payment requirements or don’t have perfect credit. If you’re ready to buy but aren’t sure if you can afford a mortgage right now, an FHA loan from Space Coast Credit Union may be the right option for you.

 

Why FHA Home Loans Are Affordable

The Federal Housing Administration insures FHA mortgages to protect the lender in the event a borrower isn’t able to pay back the loan. The FHA itself doesn’t lend money; the financial institution does, just as with any mortgage loan.
 
With an FHA loan, borrowers must pay for loan insurance with a mortgage insurance premium (MIP). This mortgage loan insurance is one of the reasons FHA home loans are often the most affordable option for buyers and why lenders are willing to make these loans.
 
The premiums for FHA loans include an initial 1.75% fee, which can be paid in cash at closing or be added to the amount you’re borrowing, and monthly premiums that will be part of your regular mortgage payments. Several factors will determine the amount of this fee, such as how much you are borrowing and the amount of your down payment. Keep in mind that this mortgage loan insurance is in addition to the homeowners’ property insurance, which will also be a part of your loan payment.
 
Unlike private mortgage insurance (PMI) on conventional loans, MIP may be required for the full term of the loan. FHA MIP costs fluctuate, so be sure to ask your lender about current rates.

 

FHA Loan Benefits

FHA home loans help give home-buying power to borrowers who may find qualifying for conventional loans a challenge. Some of the many advantages this home financing option may provide the ability to:
 
  • Buy single-family homes, multi-unit properties such as duplexes, manufactured homes, and condos
  • Use gift money or seller assistance to fund the down payment or put toward closing costs
  • Qualify even though you may have credit history issues
  • Qualify with a down payment of just 3.5% of the loan amount
  • Avoid pre-payment penalties
  • Potentially have a future buyer of your home assume your FHA loan
     
Another important benefit is that obtaining a mortgage and making your payments on time is a great way to improve your credit, year by year. Good credit can be the key to qualifying for lower interest rates on vehicle loans and other types of non-mortgage loans that can save you thousands of dollars over time.

 

How Conventional Loans and FHA Loans Differ

Borrowing money to purchase real estate is likely to be the largest financial transaction you will ever make, so be sure you understand the differences between all of the types of loans that may be available to you. Keep in mind that all loans have their pros and cons.
 
Conventional loans, often referred to as traditional loans, are the clear leader when it comes to which type is most popular among buyers. According to Bankrate.com, the U.S. Census Bureau reported that conventional loans accounted for more than 73% of new home sales in 2018’s first quarter. By contrast, FHA loans were second, but made up only 12% of all loans in the same time period.
 
Generally speaking, FHA loans are often the sole option for people who have low credit scores, high debt-to-income ratios, or limited funds for down payment. Conventional financing is available to borrowers with very good credit.
 
In the case of FHA loans vs. conventional mortgages, here’s what else you need to know:
 
  • Rates: Interest rates may be lower on FHA loans, but the savings compared to conventional loans may not be significant—in fact, they can even be higher. If you’re considering an FHA mortgage, make sure you have current interest rate information.
  • Mortgage insurance: The private mortgage insurance on conventional loans can be cancelled when you have accumulated 80% home equity, refinanced with a minimum of 20% equity, or reached another specified equity milestone. With FHA loans, MIP may increase the balance on your loan and you may not reach any point where you can have MIP removed.
  • Down payments: Before you choose an FHA loan, ask your lender to review other types of loans and their respective down payment requirements. Although FHA loans are known for generally requiring a lower down payment, find out if you may be able to qualify for other low down payment loans before making your final decision.
  • Limits on loan amounts: Conventional loans usually have higher loan limits. If you’re hoping to purchase a relatively expensive home, FHA loan limits may not be an option for you.
  • Residential requirements: Many types of conventional loans can be used to purchase rental or investment properties. FHA loans can be used only for properties that will be the borrower’s primary residence.
  • Terms: FHA loans are available with fixed-rate terms of 15 and 30 years, while conventional loans offer more choices in term length. At SCCU, for example, terms for our fixed-rate conventional mortgages include 10, 15, 20, or 30 years.

Note: A VA loan, which is insured by the U.S. Department of Veterans Affairs, is another mortgage option that can make homeownership more accessible to borrowers with lower or moderate income. You must be an active duty service member, veteran, or widowed military spouse in order to be eligible for a VA loan. VA loans can be obtained with no down payment and no minimum credit score requirement.

 

FHA Loan Requirements

With all types of mortgage loans, including FHA home loans, you will need to be able to meet a specified set of requirements in order to qualify. While various lenders can have requirements that don’t adhere to minimum requirements set by the FHA, such as higher credit scores, typical mortgage loan requirements include:
 
  • A set minimum down payment
  • A qualifying credit score
  • A certain ratio of your debt to your income

You should check with your lender for specific information, but generally, requirements for FHA loans may include:
 
  • The ability to maintain a certain level of income in the future
  • A down payment of at least 3.5%
  • A debt-to-income ratio of 50% or less
  • A minimum credit score of 500
  • A credit score of 580 or higher to qualify for the lowest down payment amount
     
If you satisfy all of the requirements of the FHA program and those of your lender, you can’t be denied an FHA loan based on factors identified by Fair Housing laws. That means you cannot be denied based on any factors that are discriminatory.
 
If you already have a specific property in mind, you should be aware that there are certain housing requirements associated with FHA mortgages. FHA home inspections can be strict and there are standards that must be met regarding structural soundness and whether the property poses any health threats to occupants. The home will need to be appraised as well.
 
Contact SCCU for more details on the requirements for qualifying for an FHA Loan.

 

FHA Loans From Space Coast Credit Union

If you’re looking for the affordability of an FHA loan and want additional benefits, start with Space Coast Credit Union. These are just some of the features of our FHA home loans:
 
  • You’ll enjoy fast pre-approval decisions over the phone or online
  • Lower credit score requirements are available
  • Our loans have more flexible debt-to-income ratio requirements
  • We offer expanded co-borrower options
  • There is no intangible tax – since SCCU is a non-profit credit union, we are not required to pay Florida Intangible Personal Property Tax
  • You can earn thousands in cash rewards with SCCU HomeAdvantage®, available to buyers who select and use a real estate agent in the HomeAdvantage network
  • As a member of SCCU, your FHA loan will be serviced by SCCU for the life of the loan
  • You’ll also get our mortgage interest rate guarantee: If the comparable SCCU interest rate is lower than your original interest rate five business days prior to closing and the interest rate lock-in hasn’t expired, we will lower the interest rate on your FHA loan five business days before closing

The terms and fees for an SCCU FHA home loan are:
 
  • Terms up to 30 years
  • No application fees
  • No pre-payment penalties
  • An origination fee of $1,100

FHA Home Loan Interest Rates

Effective Date: December 01, 2021
Apply Now
Term Rate "As Low As" APR* "As Low As" Example Loan Amount Example Monthly Payment
15 Years 2.625% 2.768% $200,000 $1,345.38
30 Years 3.125% 3.204% $200,000 $856.75
HOME LOANS:  Mortgage loans are originated by Space Coast Credit Union, and are subject to credit approval, verification and collateral evaluation. Programs, offers, rates, terms, and conditions are subject to change or cancellation without notice. Certain restrictions apply. Taxes and insurance not included, your actual payment obligation will be higher.
 
These mortgage loan programs constitute first mortgage liens secured by the home and property. Your down payment is determined by the Loan-to-Value ratio. (90% LTV = 10% down payment). Loans exceeding 80% of the appraised value of the home require private mortgage insurance.  Member responsible for any funds needed for closing costs and pre-paid escrow. 
 


More Information on FHA Loans

If you’d like to read more about FHA home loans, the federal government provides several resources. One is the U.S. Department of Housing and Urban Development’s information on FHA loans, which also includes links to helpful information about buying your first home, knowing your rights, and more. The Federal Housing Administration is part of HUD and is the largest mortgage insurer in the world, with more than $1.3 trillion in mortgage insurance on loans for multi-family properties, single-family homes, and healthcare facilities. You can also learn more about the FHA on the HUD website and from our ultimate guide to FHA loans.

 

Buying a Home With an SCCU FHA Loan: What to Expect

If you’re a first-time homebuyer, the process may be somewhat of a mystery. When you’re a Space Coast Credit Union member, however, we make it simple! Here’s a high-level overview of the main steps that take you from application to homeownership:
 
1. Applying for a mortgage: You’ll be asked to gather key information and documents, such as bank statements, tax returns, work history, and more. We’ll also need information on the property you want to purchase, including the purchase price, total amount of the loan you’re requesting, the property address, and other details. During the application process, we will provide an estimate of closing costs and an estimate of what your monthly principal, interest, property taxes, insurance, and mortgage insurance premium payments will be. You will also know how much you will pay over the life of the loan in principal and interest.

2. Mortgage loan processing: This phase is when all of your documentation will be reviewed and verified. (Don’t be alarmed if you are asked to provide additional information—this is a common occurrence.) A property appraisal will be ordered and a title search conducted. At the end of this loan processing and underwriting stage, you will know if you have qualified for the loan.

3. Closing: This is when you meet with SCCU, the seller, the real estate agents, and others to finalize your loan. We’ll provide actual amounts of the costs that had previously been estimated, you will sign a lot of papers, and then the property will be yours.
 
For more information about the home-buying process, visit our Home Buying Center online.

 

Apply for an SCCU FHA Home Loan Today

When you have a loan with Space Coast Credit Union, you also become a credit union member. Here’s how membership works:
 
  • Every member establishes SCCU membership by opening an SCCU regular savings account. Your membership means you are an owner of the credit union.
  • Your savings account can be used as an overdraft protection source, and comes with a range of benefits, such as free Online and Mobile Banking, free mobile deposit, and much more.
  • When you close on your SCCU mortgage loan, you will automatically open your savings account with a $5 deposit.
     
As a member-owned financial cooperative, we’re always working to return profits to our members through lower fees, better interest rates, and service enhancements. You’ll also enjoy the convenience of having local decision-makers when you need borrowing assistance. Plus, you'll have the peace of mind of knowing that your funds are federally insured by the National Credit Union Administration (NCUA), which insures deposits up to $250,000.
 
 If you have questions or would like more information about all of our home financing options, please call our Express Mortgage team at your local number below. Use extension 8976 to speak to our mortgage team.
 
Brevard: 321-752-2222
Broward: 954-704-5000
Miami-Dade: 305-882-5000
All other areas: 800-447-7228

Are you ready to become a homeowner with an FHA home loan?

 
Was this helpful?
Is it Hard to Get a Construction Loan? Your Questions Answered
December 1, 2021 by Space Coast Credit Union
You may have lots of questions when it comes to getting a construction loan, and we’d like to help lessen your stress. With some knowledge under your belt, you’ll be well on your way to breaking ground.
30-year Fixed-rate vs. 15-year Fixed-rate (+ How to Decide Between the Two)
November 4, 2021 by Space Coast Credit Union
Today in the ring: 30-year fixed-rate mortgage vs. 15-year fixed-rate mortgage. In this article, we’re going to cover the pros and cons of each mortgage term to help you make a more informed decision. And along the way, we’ll provide some helpful tips to keep in mind.
HELOC Loan vs. Cash-Out Refinancing: Everything You Need to Know
October 12, 2021 by Space Coast Credit Union
Whether you’re looking to transform your home renovation dreams into reality, plant seeds for investments, or cover unforeseen expenses, you have a variety of options when it comes to how you can tap into your wellspring of home equity. But which option is best for you? In this article, we’ll explore the pros and cons of HELOC loans vs cash-out refinancing.
The Ultimate Guide to FHA Loans
August 27, 2021 by Space Coast Credit Union
Home loans are the key to turning a house you love into a home that belongs to you. As you’re exploring your options, you may stumble across FHA loans and wonder what they entail and if one’s right for you. FHA loans have many different benefits and are targeted at helping both new home buyers achieve the dream of home ownership and those looking to refinance. 
How Mortgage Refinancing Works (+The Best Time to Do It)
August 12, 2021 by Space Coast Credit Union
Refinancing your mortgage can help you save money with a lower interest rate and get you to the home ownership finish line faster than your current one. Or, it could be a good way for you to cash out on some of your home’s equity for other projects. To determine if it’s the right path for your goals, it’s best to understand how mortgage refinancing works more in depth.
5 Top Tips to Getting the Best HELOC Rates
July 29, 2021 by Space Coast Credit Union
Whether you’re getting your feet wet or diving in the world of loans, a HELOC is often a prime choice for borrowers. And the crown molding on top? You can often get a lower interest rate with a HELOC than with other types of loans and credit cards! See our 5 top tips to getting the best HELOC rates...
How Does a Home Equity Line of Credit Work? A Guide to HELOC Loans
July 9, 2021 by Space Coast Credit Union
Most people have heard of a Home Equity Line of Credit (HELOC), but you may not be as familiar with how they work. In today’s deep dive, we’re going to explore all the ins and outs of this fantastic loan vehicle for homeowners to get the cash they need to do repairs, renovations, and more—all based on the equity they already have in their home.
FHA Loans: What to Know Before You Apply
July 7, 2021 by Space Coast Credit Union
It’s not always easy to save up for the large down payments that some types of mortgages require. The good news? There are other loan options that can help you reach your homeownership goals.
Are You Ready for Hurricane Season?
May 12, 2021 by Space Coast Credit Union
While many of us are still weathering the effects of the COVID-19 pandemic, we now have to be prepared for hurricane season as well.
How to Make Your Loan Payment
April 1, 2021 by Space Coast Credit Union
SCCU’s loan payment process is designed to be as quick and convenient as possible, saving you two of the things you care about most – time and money.
Five Tips to Building Your Dream Home
April 1, 2021 by Space Coast Credit Union
Here are 5 tips to building your dream home, from creating a prioritized list of wants and needs to choosing the best lender for your home construction loan.
A Beginner's Guide to Construction Loans
April 1, 2021 by Space Coast Credit Union
This construction loan guide is to help you understand everything you need to know about how construction loans work and how these unique instruments can benefit you during construction.
Navigating the Home Loan Journey
February 10, 2021 by Space Coast Credit Union
Understanding today’s mortgage landscape will help you become a more informed decision maker and put you on the path to successfully reaching your goal — moving into your new home, or enjoying the spoils of your growing equity.
The Ultimate Guide to Mortgage Loans
January 25, 2021 by Space Coast Credit Union
Learn the differences between fixed-rate, ARM and other mortgages in our guide to mortgage loans. Find out how to choose the lender that's right for you.
Which Type of Mortgage is Best for Me?
October 22, 2020 by Space Coast Credit Union
By the end of this guide, you will have a clearer understanding of the different types of mortgages and be able to narrow down which mortgage type may be best suited for you.
5 Tips for Buying a House During the Pandemic
June 30, 2020 by Space Coast Credit Union
Although you should move forward carefully in the homebuying journey, you do not have to put your dream home on hold.
SCCU Member Hurricane Checklist
August 28, 2019 by Timothy M. Antonition
Overall we have been relatively lucky in the last several years; however, we always need to be prepared.
How to Tackle Your New Home Search
August 27, 2018 by Gary Prager
If you’re just starting your new home search, you’ll be quick to find it’s no longer a “buyer’s market.”
Mortgage Rates are Rising, is it Better to Buy or Wait?
April 5, 2018 by Gary Prager
If you’ve been on the fence, now might be the time to act. 
Spring into Home Buying
February 7, 2018 by Space Coast Credit Union
Spring is a busy season in the housing market, with more homes available than any other time of year. 
Home Improvement Tips and Strategies
December 8, 2017 by Space Coast Credit Union
Ready to remodel? Here are three important home improvement tips.
3 Important Mortgage Loan Questions to Ask
July 14, 2017 by Space Coast Credit Union
If you’re buying your first home or haven’t applied for a mortgage in a while, ask your lender these questions.
Home Loan Process: Pre-Approval to Closing
June 1, 2017 by Space Coast Credit Union
If you're new to home buying, it's natural to wonder how the mortgage loan process works.
How Much House Can I Afford?
May 18, 2017 by Space Coast Credit Union
It's a question we get asked frequently, and there are many factors that go into answering it...
Down Payments: How Much is Enough?
April 20, 2017 by Space Coast Credit Union
Making a down payment is an investment and, as with any investment, it's important to weigh the pros and cons.
What is a Mortgage Pre-Approval?
April 20, 2017 by Space Coast Credit Union
Is a mortgage pre-approval something you need before you can start house shopping?
How Interest Rates Affect Your Mortgage
May 13, 2016 by Space Coast Credit Union
The interest rate on your mortgage can affect your monthly payment by thousands of dollars each month.
The SCCU HomeAdvantage
March 1, 2015 by Gary Prager
Space Coast Credit Union aims to be the one-stop-shop for members purchasing a home.