FHA Loans
What is an FHA Loan?
FHA loans are home mortgages that are insured by the Federal Housing Administration. They are government-backed loans designed to provide a safe and affordable option for Americans to buy homes. FHA loans are popular because they require lower down payments, have lower credit score requirements, and have more flexible lending guidelines compared to traditional loans.
Who is eligible for an FHA Loan?
FHA loans were designed for low- and moderate-income individuals and families who want to buy a home but don't have enough money saved for a down payment or don't have perfect credit. To be eligible for an FHA loan, the borrower must have a credit score of at least 500 and put down a minimum of 3.5% of the home's purchase price. The borrower must also prove they have steady employment and income to afford the monthly mortgage payments.
What are the benefits of an FHA Loan?
There are many benefits to getting an FHA loan. The primary benefit is that you can have a lower credit score and still qualify for the loan. FHA loans have lower down payment requirements compared to traditional loans. This type of loan also has more flexible lending guidelines, which allows more people to qualify for a home mortgage. To qualify for an FHA loan, it requires more lenient debt-to-income ratio requirements, meaning that you can qualify for a loan even if you have other outstanding debts.
Why should you get an FHA Loan?
The housing market can be tough for first-time homebuyers, young families, and others who don't have the resources to meet the strict requirements of a traditional loan. An FHA loan is a good option in these cases because it can help you buy the home you want with lower credit score requirements, a lower down payment, and more flexible lending guidelines. Additionally, FHA loans offer competitive interest rates and are assumable, making them a smart choice for those who want to stay in their homes for the long-term. With these benefits, an FHA loan is an excellent option for first-time homebuyers and anyone who wants to make homeownership a reality.
FHA Loans
If you are in the market to purchase a home, you have probably done lots and lots of research. You have probably spent hours looking at homes online, browsing Zillow and Realtor, maybe even reaching out to a realtor if you found something that really sparked your interest. The excitement of looking at homes can sometimes overpower the reality of what it actually takes to buy that home. One of the best things new homebuyers can do is to start their search by researching financing. There are several types of loans and lenders available, so finding the best one for your financial situation is going to save you a lot of hassle and money in the long run.
FHA loans are a great way for first time home buyers to secure financing to purchase a home especially if they have less than perfect credit or lack a large down payment. FHA loans are accessible to a wide range of people and are backed by the government so they aren’t as risky as other types of financing. FHA loans are a good route to consider because if you decide you would like to sell your home, it is an assumable mortgage, which means the loan can be transferred to the new buyer.
How To Qualify
The first thing you’ll do is prepare and review your finances. Your credit score is very important when discussing finances with a lender so you want to do whatever you can to make sure it’s at the highest it can possibly be, but it needs to be over 580 for an FHA loan. You’ll also need a down payment but it’s only 3.5 percent which is a lot less than you would need for other mortgages.
These are the two most important requirements that are needed to qualify for an FHA loan but there are others listed below:
-Steady employment
-Social security number
-FHA loan must be used for a primary residence
-Property appraisal
-Front and back end ratios must fall under specific percentages
-No recent foreclosures or bankruptcy
Things To Consider
An FHA loan is fairly easy to qualify for, especially in comparison to a conventional loan so that means there are some stipulations that must be met on the back end. You must have mortgage insurance if you want to secure an FHA loan. The first type of insurance premium is paid in full and the other is a monthly payment.
Call Us Today
We know that purchasing a home comes with many choices and lots of ups and downs but the process itself can be truly rewarding and very educational as well. At North Star Mortgage in Jacksonville, FL we want to make sure we are here for you from the first step to the last, so don’t hesitate to reach out today.
