FHA 15 Year Loan Requirements
Home buyers who are shopping for an FHA 15 year loan will find lower interest rates and the ability to pay down the mortgage twice as fast as a 30 year mortgage. FHA 15 year mortgage rates are also lower than the 30 year fixed rates which makes it a money saving alternative.
The FHA 15 year loan is for home buyers who have the ability to make higher payments to pay down the mortgage quickly
Benefits of an FHA 15 Year Loan
An FHA 15 year loan will have higher payments than a 30 year loan, but there are some benefits that come with the increased monthly cost. Some of those benefits are:
- Low down payment requirement
- Lower interest rates
- Lower credit scores accepted
- Higher debt to income ratios allowed
- Rapid accumulation of equity vs a 30 year mortgage
- Lower FHA mortgage insurance payments
- Mortgage free 15 years earlier
In general, the FHA 15 year loan is a great deal if you can afford the higher payments.
FHA 15 year loan requirements
These are the minimum requirements to get approved for an FHA 15 year loan.
- Minimum FICO score requirement of 500 – down payment will be higher with the lower credit score
- Minimum down payment requirement of 3.5%
- Mortgage Insurance Premium (MIP) is required for every FHA loan
- Maximum debt to income ratio of 43%
- The home must be the primary residence
- The borrower must have a 2-year work history with steady income
- Home must pass FHA inspection
The requirements for the FHA 15 year loan are the same as the FHA 30 year loan. It just becomes more difficult to qualify with the higher payment.
FHA 15 Year vs FHA 30 Year Loan
There is a significant payment difference between an FHA 15 Year vs an FHA 30 Year loan. However, there is also a significant savings in total interest paid between the two programs. In the chart below, you will see an example of how these two programs compare. We are using a loan amount of $200,000 and interest rates of 3% and 3.25%
|FHA 15 Year||FHA 30 year|
|Loan Amount||$ 200,000||$ 200,000|
|Principal & Interest||$ 1,357||$ 843|
|Mortgage Insurance||$ 116||$ 141|
|Total Mortgage Payment||$ 1,473||$ 984|
|Total Interest Payments||$ 44,303||$ 103,554|
|Interest Savings||$ 59,251||$ 0|
FHA 15 year loan rates
Today’s FHA 15 year loan rates are as low as 2.25% depending upon the lender, your credit score, and loan amount.
Interest rates for the FHA 15 year loan fluctuate daily and sometimes multiple times per day. If you are looking for an up to date rate quote, we can have one of the FHA lenders in our network call you today. Simply complete this 15 Year FHA Rate Quote Form to see what your rate will be.
FHA 15 year refinance
Refinancing into an FHA 15 year loan would be something to consider only if you have little to no equity in the home. FHA loans require borrowers pay the FHA mortgage insurance for the life of the loan. Therefore, if you are refinancing and have at least 5% equity, it may benefit you to refinance into a conventional 15 year loan if you can qualify.
If your credit scores are lower or of you have a higher debt to income ratio, then the FHA 15 year refinance would likely be the better option vs a conventional 15 year loan.
Alternative to an FHA 15 Year Loan
The rate difference between an FHA 30 year vs an FHA 15 year loan is not significant. You should consider getting a 30 year fixed to keep your “required” monthly payment lower. Then, just send the extra payments when you are able to do so.
FHA 15 Year Loan – Frequently Asked Questions
Is there PMI on a 15-year FHA loan?
FHA mortgage insurance (PMI) is required on the 15 year FHA loan. However, the mortgage insurance rate is lower than the 30 year loan.
Is it a Good Idea to Pay off Your Mortgage Sooner?
There are some people who prefer to invest the additional payment into an investment vehicle that can yield a better return than the interest rate on your mortgage. Especially today when rates are so low.
Adam Garcia, Founder and Owner at The Stock Dork says, “The sooner you pay off your mortgage, the more money you will have to save on monthly payments. This is especially important if you’re buying a property later in life. “
There is a liberating feeling when you have paid off your mortgage and no longer have a housing payment.
Are the Rates for an FHA 15 Year Loan Lower?
Interest rates for an FHA 15 Year mortgage are typically at least .25% lower than the 30 year mortgage
Also read [FHA Loan Requirements]