Quick Look: The Best FHA Loan Lenders in Ohio
Do you have a lower credit score or more debt than the average homebuyer? If you do, an FHA mortgage loan can make it possible for you to buy a home. We’ll take a look at what FHA loans and FHA-approved lenders are and some of the best mortgage companies that offer FHA loans in Ohio.
Best Lenders for FHA Loans in Ohio
Now that you understand how FHA loans work and what you need to apply, let’s take a look at some of our favorite lenders offering FHA loans in Ohio. Remember, your loan depends on several factors, including your monthly mortgage payment, additional loan requirements, monthly premiums for a range of insurance policies, the property type, your monthly income, employment status and more.
1. CrossCountry Mortgage
CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. CrossCountry Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. CrossCountry Mortgage can also help Ohio residents get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
2. New American Funding
An FHA loan is ideal for those who have less than perfect credit or no credit history. You'll have the option of 30 year fixed or 15 year fixed loans with a low down payment option. To qualify for an FHA loan though New American Funding you'll need a credit score of 580 or higher, 3.5% - 10% down depending on credit score and proof of steady income. Along with that, mortgage insurance is required, there are higher home inspection standards and the loan will have to be used for a primary, residential property.
New American Funding has a A+ rating with the BBB and over 236k reviews. There's something to be said about reputation and borrower satisfaction when it comes to New American Funding. Apply today for an FHA loan.
3. Rocket Mortgage®
Buying a home for the first time can be a long and confusing process. If you’re getting ready to buy your first home, consider getting preapproved through Rocket Mortgage®’s simple process. Ohio residents can log on today and get started. Plus, they can look into several loan options that might suit their situation, including FHA, VA, USDA and many others.
A product of Quicken Loans®, Rocket Mortgage® offers a simplified preapproval system — just answer a few questions about your income and fill in some personal information and you’ll see your loan options in as little as a few minutes.
4. CapCenter Mortgage
When you want to buy or sell a home, you will be involved with several entities. It can be confusing because everything is coming at you all at one time. As a result, you spend quite a lot of money on closing costs. Plus, you can get turned around during the process while you’re trying to move, live your life, work, etc.
CapCenter aims to cut your closing costs by offering all the services you need in one place. Buy, sell or refinance, you can do everything you need with the help of the CapCenter team, and your closing costs will drop significantly. There are no closing costs for purchases or refinancing, and you only pay a 1% listing fee to sell your home.
As you shop for or wish to sell a home in Ohio, you can simplify the process with a call to CapCenter.
What is an FHA Loan?
An FHA loan is a type of government-backed mortgage loan that makes it easier to buy a home with a lower credit score or more debt. These types of loans are just one government backed loan, but they are fairly common amongst the home-buying public. The variety of loan options allows many types of people to purchase a home, but remember that these are not loans for those with bad credit, they are simply loans that may have a lower minimum credit score for qualification.
FHA loans have insurance from the Federal Housing Administration. This insurance allows your lender to collect what they’re owed from the federal government if you default on your loan and your home goes into foreclosure. This means that banks and lending services can offer FHA loans to borrowers who might not qualify for conventional mortgage loans.
Requirements for an FHA Loan
FHA loans have lower standards than conventional loans. They’re mainly intended for first time homebuyers who need a bit more assistance qualifying for a loan. Here are a few of the minimum requirements you’ll need to meet to get an FHA loan.
- Credit score: The federal minimum credit score you need to get an FHA loan is 580 points if you have a down payment of at least 3.5%. You might qualify for a loan with a score as low as 500 points if you have at least 10% down. Lenders can set their own credit requirements for FHA loans. Many lenders require a minimum score of 620 for all loan types.
- Residence: You can only use an FHA loan to buy a primary residence — that’s a home you live in for most of the year. Your home must also meet livability standards, and you must move in within 60 days of closing.
- Home price: You can only borrow so much money with an FHA loan. In most parts of the country, the limit is $356,362 for a single-family home. However, in areas where the cost of living is more expensive, you may qualify for a loan as large as $822,375. In Ohio, the limit is $356,362 for most areas. However, the limit in Columbus is currently $397,900.
- Debt-to-income (DTI) ratio: Your DTI ratio is a percentage that describes the amount of regular income that goes toward bills. Calculate your DTI ratio by dividing your total minimum monthly debt payments by your total monthly pre-tax income. For example, if your household brings in $3,000 a month and $300 of that goes toward debt payments, you have a DTI ratio of 10%. To qualify for an FHA loan, you’ll usually need a DTI ratio at or below 43%. However, if you have a large amount of money in savings, you might be able to qualify for a loan with more debt.
Lender Specifics for FHA Loans
Different lenders may have different standards when it comes to who qualifies for a loan. Let’s take a look at how lender standards might vary for FHA loans.
|Lender||Minimum Credit Score||Loan Servicing||Minimum Down Payment|
|Rocket Mortgage®||500 or 580, depending on down payment||In-house||3.5%|
|Bank of America||600||In-house||3.5%|
|Quicken Loans®||500 or 580, depending on down payment||In-house||3.5%|
|San Diego County Credit Union||620||In-house||3.5%|
Interest Rates for FHA
There are two types of interest structures you can take when you accept an FHA loan: adjustable-rate and fixed-rate loans. The interest structure you choose will influence how much you end up paying in interest by the time you pay off your loan.
- Adjustable-rate loans: As the name suggests, an adjustable-rate mortgage (ARM) has an interest rate that changes throughout the life of the loan. ARMs begin with a fixed interest rate. During this period, you’ll have access to an interest rate that’s lower than current market rates. After your fixed period ends, your mortgage interest rate will go up or down, depending on how market rates move. ARMs have caps in place to prevent your interest rate from going up too many points or falling too many points over the course of your loan.
- Fixed-rate loans: Fixed-rate loans keep the same interest rate throughout the life of the loan. The rate you lock into when you sign up for the loan is the same interest rate you’ll pay until you make your last payment. Fixed-rate loans are usually better for people who plan to live in their homes for a long time.
Do You Need Mortgage Insurance?
You don’t need to pay for private mortgage insurance (PMI) on an FHA loan but you do need to pay the FHA’s mortgage insurance premium (MIP). You’ll pay MIP twice — one upfront payment and one that’s added to your mortgage payment each month.
Your upfront MIP is always equal to 1.75% of your total loan value. This rate is always the same, no matter how much your loan is for. For example, if you borrow $100,000 to buy a home, your upfront MIP is equal to $1,750. Your upfront MIP payment is due at closing.
You’ll also pay a monthly MIP. The amount you’ll pay in monthly MIP depends on the size of your loan, your loan term and your down payment. Your monthly MIP rate might be as low as 0.45% of your base loan amount or as high as 1.05%. MIP is calculated as an annual rate. For example, if you borrow $100,000 and you have a MIP rate of 1.05%, you’ll pay $1,050 over the course of a year — that’s an extra $87.50 a month. You can lower your monthly MIP dues by bringing a larger down payment to the table, buying a less expensive home or taking a shorter loan term.
You must pay MIP for the life of your loan. Unlike PMI, you cannot cancel MIP when you reach 20% equity in your home. However, you can refinance your FHA loan into a conventional loan when you reach 20% equity and remove your MIP.
How to Apply for an FHA Loan in Ohio
FHA loans in Ohio are serviced through private lenders. Though the government provides insurance on these loans, they don’t service them. You’ll need to apply through a lender certified to offer these loans to get an FHA loan. Here’s how to get started and get the loan you need.
- Step 1: Compare lenders. There are a number of lenders that offer FHA loans in the Buckeye State. Take some time to research lenders, loan offerings, minimum credit score requirements and customer service ratings.
- Step 2: Make sure you qualify. You must meet credit and down payment qualifications before you can get an FHA loan. Contact your lender and ask about FHA loan minimum standards. As a general rule, you must have at least a 3.5% down payment if your credit score is at least 580 points. If you have a 10% down payment, you can get a loan with a score as low as 500 points. However, these stipulations can vary by lender. Double-check with your lender before you apply and make sure your score and payment qualify.
- Step 3: Collect financial documentation. Your lender will ask you for some financial documentation when you apply for any type of mortgage loan. Your loan eligibility will depend on verifiable income, your current credit score, etc. This ensures that you have the means to pay back the money you borrow. The specific documents you’ll need to provide will vary by lender, but you should have 2 months of bank statements, your 2 most recent pay stubs and your 2 most recent W-2s ready before you apply.
- Step 4: Submit an application. Once you know you qualify and you have your documents ready, apply for a loan using your lender’s system. Most lenders now allow you to apply for a loan online.
Move into Your Dream Home without Breaking the Bank
FHA loans have made homeownership a more achievable dream for Americans across the country. However, you shouldn’t choose the first lender you read up on just because FHA loans have lower standards. Whether you’re buying a home for the first time or want to get a refinance quote, take the time to look at a few lenders’ current rates and qualification standards. Knowledge is power when you’re ready to get a mortgage.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
What are the drawbacks of an FHA loan in Ohio?
The disadvantages include higher costs for an appraisal and the mortgage insurance premium.
What are the requirements to qualify for an FHA loan?
You must have a credit score of 580, a 3.5% down payment and a debt to income ratio of less than 43%.
Get Ready for Take Off
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