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Comparing a Habitat Loan with an FHA Loan

Posted by Twin Cities Habitat for Humanity on 9:42 AM on July 18, 2019

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. FHA
Income Eligibility Must meet income guidelines  
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
Term 30 years Up to 30 years
Interest Rates Currently 3.0%; fixed APR 3.0538%* Dependent on market, borrower credit score, and down payment
Maximum Loan-to-Value (LTV)

96.5% LTV

110% CLTV with deferred subordinate financing

90% with a credit score between 599-579

96.5% with a minimum credit score of 580

Mortgage Insurance Not required Mortgage insurance premium dependent on borrower credit score and down payment
Minimum Credit Score

Preferred 620

Minimum 580 or no credit allowed with alternative credit sources

Minimum 500
Affordability Ratio (debt-to-income)

28-30% Housing Obligation/43% Backend

Note: Housing obligation includes principal and interest, PT&I escrow, Habitat-required maintenance fund, and, if applicable, homeowners association dues

31% Housing Obligation/43% Backend
Minimum Borrower Contribution

$3,000 towards closing costs (gift funds allowed)

First year homeowner's insurance premium

100 build equity hours (if purchasing a Habitat-developed home)

3.5% down payment (10% if credit score 500-579)

All closing costs

Upfront mortgage insurance premium

*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 of a down payment do I need to make on my FHA loan?

  • How much will I have to pay each month for mortgage insurance? What factors determine how much I will have to pay?

  • How much of my monthly income would be going towards my FHA mortgage payment?

  • How much cash will I have to bring to closing?

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.

first time homebuyer guide


Tags: Homeownership Program, Habitat Mortgage, 2019

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