July 3, 2024
Are you looking for your first home? Applying for an FHA loan might seem intimidating, but there are some things you can do to help reduce those feelings of being overwhelmed by unfamiliar details.
This is especially true in an age of confusing information about changing interest rates, modified credit qualifying standards, and options to save your home if disaster strikes.
Start Early
The key is to start early and plan ahead. Before you fill out loan application paperwork, consider making your planning phase for the loan last a year or more. This takes some immediate pressure off borrowers to save up for the down payment and closing costs.
It also provides adequate time to work on your credit and cut your monthly debt. What other things can first-time home buyers do to help themselves in the months leading up to the home loan application?
Home Loan Planning Means Knowing Your Housing Market
Some borrowers start their homeownership journey without knowing what they want from their first home. Do you want a mobile home? A multi-unit property? Maybe you want to explore your options for a condo or townhouse? All are possible under the FHA single-family home loan program.
Others know exactly what they want out of a house, and a good example are those who apply for FHA One-Time Close construction loans to build a home instead of buying an existing property.
These buyers know they want to approve the design, and have more of a say in how their homes are put together.
Those who do not know what kind of home they want have plenty of options with an FHA mortgage. Could a townhome, duplex, or condo unit be in the future for a currently undecided buyer?
It’s important to know your options and all of the choices mentioned above are available for purchase with an FHA mortgage.
Save Early For Your Down Payment
Do you know how much of a down payment you can come up with? Do you need a down payment gift or grant? If you need the help of a local down payment assistance program, you should start exploring your local options immediately.
The FHA does not have a down payment assistance program, but you may be able to find one offered by a state or local agency in your housing market.
To calculate the down payment, you will need an estimate of the cost of the home you want to buy. The down payment percentages are 3.5% minimum for those who financially qualify 10% for those with FICO scores that are lower than lender standards, and the FHA’s minimum 580 credit score for maximum financing.
What Is Your Monthly Mortgage Payment?
To determine if you can afford the monthly mortgage payments, try using an online mortgage calculator, but remember that you will need certain information to get a good estimate. That information includes any estimated property taxes.
Remember that getting a more accurate estimate from the mortgage payment calculator requires you to input data about property taxes, any applicable homeowner’s association fees, mortgage insurance premiums, etc.
Home Loan Advice: It Pays To Have Options
Some borrowers want their new home to have an office, rec room, man cave, or basement bar. But some housing markets can’t support certain features—we’re talking specifically here about basements, as some housing markets simply don’t feature them.
Other markets may have homes with or without basements, fireplaces, patios, etc.
Some want a house with a swimming pool or jacuzzi, while other house hunters seek properties with distinctive design features like high-end facades, brick, stucco, marble, etc. But when planning your loan, flexibility with these options is helpful.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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