Eager to stop paying rent and instead own a home? Worried about your credit rating or lack of a sufficient down payment? If so, then a Federal Housing Administration (FHA) mortgage loan may be the ideal solution for you. Insured by the Federal Housing Administration, FHA mortgage loans offer a myriad of benefits for prospective homeowners, particularly for those first-time buyers with less income and/or smaller down payments.
Flexibility & Accessibility of FHA Mortgage Loans
FHA mortgage loans are available in both fixed-rate and adjustable rate loan options and typically require significantly less cash up front for the down payment. This, along with the following advantages, is mostly why FHA loans remain so popular among American homebuyers.
- FHA mortgage loans allow 100% gifted down payments. There are not a lot of loan programs that will allow all or even most of the downpayment to come in the form of a gift (the primary exception being in cases of long credit history or family credit history with the lender). This mostly stems from a belief that if you can’t afford a downpayment, you can’t afford a home. However, this is certainly not true across the board, and for that reason, FHA is more lenient with gifted down payments. 0 to 100% of the down payment for a home through an FHA mortgage can come as a gift from parents, other relatives, employer, approved charitable group, or even a government homebuyer program (these programs require homebuyers to attend a course before approval).
- As little as 3.5% downpayment. Again, while most lenders, economists, and other money gurus will recommend having 20% downpayment, this number may be outdated and not reasonable or achievable for all homebuyers. Most lenders now will accept 10% to 15% (with primary exceptions being for custom constructions and condos), but an FHA mortgage loan is one of the few available programs in which you can make as little as a 3.5% downpayment.
- Flexible credit standards. You shouldn’t be punished for purchase or investment mistake you made years ago. FHA loans are also popular among first-time and second-time homebuyers thanks to being forgiving in respect to credit rankings. You don’t need to have a ‘perfect’ credit score. Even borrowers with a recent foreclosure, bankruptcy, short sale, or deed-in-lieu are still eligible for this loan. Instead, primary requirements (in addition to the downpayment) include:
- A steady employment history
- Valid Social Security Number OR proof of otherwise lawful U.S. residency
- Completed property appraisal from an FHA-approved appraiser
- Choose a lender you love. Finally, while the government insures FHA mortgage loans, they can be funded by a number of FHA-approved lenders. This includes banks, credit unions, savings-and-loans-institutions, and mortgage lenders such as Best FHA Homeloan. For homebuyers, this offers a competitive field and flexibility to choose who you want to partner with.
Prequalify for an FHA Mortgage Loan Now!
Let our team of mortgage professionals help make your home buying dreams come true. Call us at (281) 860-2533 to learn more about FHA mortgage loans or fill out this form to pre-qualify now!