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What Are FHA Loans?
FHA loans have been helping people become homeowners since 1934. The Federal Housing Administration (FHA), which is part of HUD (Housing and Urban Development), insures the loan. Approved FHA mortgage lenders, including banks, credit unions and various nonbanking institutions, issue these loans to qualified buyers.
The Benefits of FHA Loans
The FHA loan requirements are much less stringent than those for most conventional mortgage products, making it easier for low-income individuals and families, as well as people with credit challenges, to turn the dream of homeownership into a reality.
The FHA mortgage offers the following:
- Low 3.5% down payment program
- All funds may come from an acceptable gift: FHA regulations regarding the acceptance of financial gifts for down payments from family members, employers and charitable organizations are more liberal than with conventional loans.
- Easier qualifying: While FHA may have lower minimum qualifying FICO scores, applicants must have a minimum FICO score of 620 in order to qualify for an FHA mortgage through Orrstown Bank.
- Help with closing costs: Sellers can pay up to 6% of the buyer's closing costs, although some FHA loan lenders cap the seller's contribution at 3%.
- Higher debt-to-income ratio: This debt-to-income ratio (DTI) compares the total of prospective borrowers' monthly debt payments to their monthly gross income. When evaluating applicants for a traditional mortgage, a desirable DTI is up to 36%. With FHA loans, the standard figure is up to 43% with higher DTIs available with compensating factors.
Because lenders must assume a higher risk when issuing FHA loans, they will require you to carry mortgage insurance premium (MIP) to protect their interests. MIP covers the lender's losses if you default on your mortgage.
Why Choose Orrstown Bank as Your Mortgage Lender in PA & MD?
Shippensburg, PA-based Orrstown Bank is a trusted source for FHA loans and other mortgage products in Central PA and Maryland. We're a community-oriented bank that has been helping people meet their financial needs for more than 100 years.
When you select us as your FHA loan lender in PA or MD, you'll work with a friendly, knowledgeable mortgage professional who has your best interests in mind. Our high-touch lending process is totally transparent and includes no hidden fees or structure issues. You'll also benefit from our localized decision-making process that helps to prevent closing delays. Although we're a smaller financial institution, we have all the capabilities of a larger bank — along with more attentive service.
Learn More About Our FHA Loan Requirements in PA and MD
Contact an Orrstown Bank loan officer today for more information and to find out about our current FHA loan rates. You can also fill out and submit the form on this page.
Important Notice: Interest Rates and Maximum Loan-to-Value may be based on Credit Score, Property Type, Occupancy, Purpose, Investor, Insurer, Loan to Value and other factors. Additional investor, insurer and Orrstown Bank criteria/conditions apply to all products. Information provided is for illustrative general use only and does not contain all qualification and automated underwriting approval requirements. Orrstown Bank reserves the right to change this information at any time. Meeting any of the criteria does not constitute a commitment to lend.