Posted on: 13 April 2021
The US government offers several loan programs for those who need a little extra help. One of the oldest and most commonly used might be the mortgage loan guarantee program offered by the Federal Housing Administration (FHA). While not a loan in and of itself, this program makes it easier for buyers to qualify for a mortgage as they work with a lender. To find out more, read on.
What's So Great About FHA Loans?
The very issues so many would-be buyers struggle with are addressed with FHA loans. Take a look at those issues and how this type of loan guarantee could be just the thing to put you in a home:
1. Credit Score Problems – Conventional lenders (offering non-governmental loans) usually have high expectations when it comes to credit scores. It's well known that the higher your score, the more likely you are to be approved for a loan at an attractive interest rate. In many cases, that can leave out those with credit scores under 750 or so. That is where FHA loans come in. Rather than base the interest rate on your score, the FHA approves buyers who have a mere 580 score. If you are willing to make a slightly higher down payment, those with a score of at least 500 may also qualify.
2. Down Payment Issues – As you probably know, it can be difficult to save money for anything, even something as important as a home. With the FHA program, however, buyers don't need to save the usual 20% down payment that many lenders want to see. If you can save 3.5% of the purchase price of the home, you can be approved. If your score is lower than 580, you will need to save 10% – still a lot less than 20%. In addition, the FHA makes it easier on buyers by letting them accept money from loved ones for the down payment as long as it is a gift and doesn't have to be paid back.
3. Moving On – Buyers may never consider a time when they want to sell their home but that day could come. Ease of selling is another way buyers benefit from an FHA loan. FHA loans are assumable and that makes it easier to sell when you are ready to move on to a new home.
The above is only part of the story. Speak to a mortgage lender to find out more.Share