July 6, 2017
Who should get an FHA loan? There are a variety of options with FHA mortgages, and depending on your financial goals and needs, you may find an FHA mortgage is the right choice for you, especially if you are interested in lower interest rates, and a more competitive down payment requirement.
FHA Loans Are For Those Who Need A Lower Down Payment
You should get an FHA mortgage loan if the idea of paying as much as 10% down doesn’t work for you. FHA mortgage loans require a minimum 3.5% down payment, which is based on the adjusted value of the property you are purchasing.
It is important to know that your credit history will play an important part in determining your down payment in some cases; borrowers who have lower credit scores may be required to pay more down as a compensating factor. FHA FICO score standards include 3.5% down for borrowers with FICO scores of 580 or higher. Lender standards may be different-but not lower-than FHA minimums.
FHA Loans Are For Owner-Occupiers
FHA home loans feature an occupancy requirement-the borrower or at least one borrower obligated on the mortgage must occupy the property as the primary residence. This is required normally 60 days after loan closing. If you don’t want to purchase a property you intend to live in, FHA loans aren’t right for you, due to this occupancy rule.
FHA Loans Are For First Time Home Buyers
FHA mortgages are perfect for first-time home buyers due to both the lower down payment and the lower interest rates offered for FHA mortgages. The long-term costs of an FHA mortgage will be lower in many cases, due to the lower interest rates for FHA mortgages.
FHA Loans Are For Repeat Home Buyers, Too
You read that correctly-FHA home loans do not discriminate against those who are not first-time home buyers. As long as you intend to live in the property you buy with an FHA mortgage, if you have owned property before you are welcome to apply for an FHA home loan.
FHA Loans Are For All Who Financially Qualify
FHA loans do not have an upper income limit, or guidelines on how much you are permitted to earn and still qualify for the mortgage. Some mistakenly believe that FHA loans are for economically disadvantaged people, for first-time home buyers only, or only for those with lower credit ratings.
The fact is, anyone who meets FHA income, credit, and employment guidelines may be considered for an FHA mortgage or refinance loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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