Lenders are able to do this because you can take out an insurance policy on the mortgage, called private mortgage insurance (PMI for short), which protects mortgage lenders on "higher risk" mortgages in case of a payment default, and thus makes lenders comfortable to offer conventional financing with less than a 20% down payment.
PMI isn't free (just like any other insurance policy), and there are various ways to pay for the PMI premium, however the two most common ways to pay for the PMI premium is to pay it on a monthly basis (on top of the principal/interest/property taxes/homeowners insurance payment you make) or you can pay a 1 time premium, and never have to pay the monthly amount. The 1 time premium amount is usually the equivalent to around 3-4 years of paying the monthly mortgage insurance, so you would want to go over the numbers to determine which option is better for you.
PMI rates, as well as interest rates on conventional mortgages, are much more credit score sensitive than FHA loans are. So for someone who has a low credit score, and not much of a down payment, FHA usually ends up being the better option between the two.
I'd recommend you speak with a loan officer to determine what all of your options are, and at that point you'll be able to realize if FHA is your best financing option or not.
Shane Milne | NMLS #81195 | Lending in all 50 states
You can also try searching on homebuyerwise.com for FHA lenders all over Oregon
(503) 698-5801 Direct
(503) 699-LOAN (5626)
(503) 716-4604 Fax,
Chris Jordan -Mortgage Banker /Summit Mortgage
Jonathan Kennedy, MBA-Mortgage Loan Consultant/Red Hills Mortgage
A division of Pinnacle Capital Mortgage Corp
Direct Line: 503-705-7176
1355 NW 13th Ave Portland OR 97209
Eric M. Young, MBA-Home Mortgage Consultant/Wells Fargo
10121 SE Sunnyside Rd. Ste. 145
Clackamas, OR 97015
(503) 654-9171 x103 Tel.
(503) 654-9032 Fax
Good luck. And let me know in case u'd use one of them.
Tom Inglesby, Broker
RE/MAX Equity Group
FHA backs about 40% of all loans originated these days, so you are not alone. Give Brandon Parmelee at Chase in Lake Oswego a call. He'd be happy to talk to you. We work together quite a bit, so I can tell you that he is very good at what he does.
And if you need any assistance on the real estate end, please do not hesitate to get in touch with me as well. Brandon and I make a great team.
Wayne Olson, REALTOR
Windermere Cronin & Caplan Realty Group, Inc.
Mobile: (503) 389-3025