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3 min read

Comparing a Habitat Loan with an FHA Loan

Comparing a Habitat Loan with an FHA Loan

This blog mentions an out-of-date interest rate. For current information on Twin Cities Habitat mortgage interest rates, please visit our TruePath Mortgage page.


If you're looking to buy a home with an affordable home loan, there are a lot of options available to you. One more well-known option is to get a loan through the Federal Housing Administration, called an FHA loan. We have a blog that dives deep into the pros and cons of FHA loans here.

Want to know how an FHA loan compares to a loan from TCHFH Lending, Inc. (Twin Cities Habitat's wholly-owned mortgage company)? Check out this handy guide to compare these products to determine what's best for you.

Mortgage papers and keys.

How does a TCHFH Lending, Inc. Mortgage compare to an FHA Loan?

Check out our chart for a side-by-side comparison. TCHFH Lending, Inc. does not offer FHA loan products. This chart is for comparison purposes only.


TCHFH Lending, Inc.


Income Eligibility

30-80% area median income. View our income guidelines here.


Eligible Loan Use

First time homebuyer;  Primary residence purchase

Primary residence purchase

Dwelling Type

Single family detached, single family attached (duplexes, condominiums, townhomes)

Single, marketable real estate entity

Eligible Homes

A Habitat-built home or any home in the 7-county metro area



30 years

Up to 30 years

Interest Rates

Currently 3.0%; fixed for all buyers (APR 3.0538%*)

Depends on lender, market, borrower credit score, and down payment

Down Payment

No down payment; deferred 0% financing available

3.5% down payment with 580+(10% for credit score 500-750)

Closing Costs & Savings Requirements

$3,000 buyer closing costs
(Gift funds allowed; Habitat pays additional closing costs)

$1,500 in savings for first year insurance premiums
(Paid prior to closing)

$1,800 in additional savings
(Accessible at loan application through closing) 

All closing costs 

Upfront mortgage insurance premium 

Maximum Loan-to-Value (LTV)

96.5% LTV

90% with a credit score between 500-579

96.5% with a minimum credit score of 580+

Mortgage Insurance

Not required

Monthly mortgage insurance premiums required dependent on borrower credit score and down payment

Credit Score

Preferred 620+

Credit scores of 580-619 or invisible/no credit acceptable with alternative credit documentation. 

Minimum 500, depends on lender

Debt-to-income (Affordability Ratio) 

30% Housing Ratio*

43% Total Debt Ratio

*Note: This is a monthly payment. It includes principal and interest, property tax and insurance escrow, Habitat-required maintenance fund, and any homeowner's association dues

31% Housing Ratio

43% Total Debt Ratio

Work History

1 year continuous employment
if self-employed, 2 years continuous at the same job

Steady employment for 2 years

Other Requirements

Complete Habitat education
Volunteer hours if purchasing a Habitat-built home

FHA Appraisal

*For example, on a $175,000 30-year fixed rate loan at an annual interest rate of 3.0% with no down payment, your monthly payment would be $737.81 and the APR would be 3.0538%. The monthly payment amount does not include sums for homeowner's insurance premiums, property taxes, or maintenance fund, all of which must be paid in addition to the principal and interest on your mortgage loan.

Learn how to buy with Habitat

Questions to ask your lender about FHA Loans

If you're thinking about exploring an FHA Loan, it's important to get all the right information to do an accurate comparison. Here are a few questions you should be sure to ask your lender:

  • What type of home can I purchase with my FHA loan?

  • What is the term of my FHA loan?

  • What is the interest rate and APR on my FHA loan? What factors determine my rate?

  • How much cash will I have to bring to closing?
  • How much of a down payment do I need to make on my FHA loan?

  • How much will I have to pay monthly for mortgage insurance?
    What factors affect my payment? 

  • What credit score does the FHA Lender require?
  • How much of my monthly income would be going towards my FHA mortgage payment?

  • Which is best if I've changed jobs? 

When shopping for a mortgage to buy your home, it is important to know all the facts so you can decide which options are best for you. Decide what you prioritize in your mortgage product: is it most important for you to have a low down payment? A low interest rate? Specific credit score requirements? When you know what is most important to you that will help you determine which mortgage product is best for you.

Glossary of Terms

In case any of the terms used above are new to you, here's a quick overview of definitions, plus some links to additional blogs on these topics.

Annual Percentage Rate (APR): the annual rate including additional costs charged at closing

Housing Ratio: total monthly mortgage payment divided by monthly gross income

Total Debt Ratio: total monthly debt payments including mortgage payment divided by gross monthly income

Deferred 0% Financing: subordinate mortgage with 0% interest; does not require monthly payments

Interest Rate: the percentage of the mortgage principal charged by the lender

Loan-to-Value (LTV) Ratio: first mortgage amount divided by the home's value

Mortgage Insurance: an insurance policy some lenders require if your down payment is less than 20% of the house sale prices or appraised value

Property Tax and Insurance Escrow- an account where payments are made toward property taxes and homeowners insurance. Escrow payments are collected as part of your monthly mortgage payment and may fluctuate from year to year. 


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