FHA Loans are a great option for first time home buyers who don’t have the 20% down payment needed. These loans require less of a down payment, which makes it easier to qualify for, and they also come with lower mortgage insurance rates. There are some requirements that you need in order to apply for an FHA Loan though.
To qualify for an FHA Loan, you need to be a first time home buyer or purchasing your primary residence. You must also have steady income even if your credit is less than perfect. The home you’re purchasing must meet certain requirements as well, such as being in good condition and meeting FHA’s property standards.
If you meet certain requirements, such as having steady income and good credit. Federal Housing Administration loans may be an option for you.
Advantages of FHA Loans
With less of a down payment needed and lower mortgage insurance rates, these loans make it easier to get into the market.
Designed for people with lower credit scores than other mortgages. These loans are ideal for first time buyers, or people that are still paying back education loans.
Keep in mind though, there still are some requirements that come with owning one of these loans.
To be eligible for an FHA loan, borrowers must meet the following lending guidelines:
- Have a credit score of 500-579 with 10% down payment or a score of 580 or higher for a 3.5% down payment.
- Have a verifiable employment records for the last 2 years.
- The borrower must live in this house
Additionally, the home must meet certain standards as well which include being in good condition.
Disadvantages
- They require mortgage insurance which is an additional cost to carry.
- The property you buy cannot be an investment property, in other words, you must live in it.
If you’re interested in seeing if an FHA Loan is right for you, or want to know more about how they work, contact their website.
