5 Reasons An FHA Loan Might Be For You
Ah yes, the famous FHA loan! Easily one of the most common loans I am asked about, as many home-buyers have heard rumors that you really should take a closer look…
There’s so much that can be said about this particular loan option, that I felt it best to narrow things down to bite-size chunks of “Five Reasons You Really Should Look Into An FHA Home Loan”!
This will make things a bit more manageable. Happy reading!
Less-than-perfect credit is A-OK
While many loans practically demand that you have squeaky-clean credit, FHA loans are far more understanding. In fact, you can still snag a 3.5% down payment home loan with credit scores as low as 580! (Yep, that’s a pretty big deal!)
For those with credit scores under 580, you still have options – Though you will need to come up with a bit more down payment. (10%)
Those with credit scores under 500 are generally going to be ineligible for an FHA loan. However, there are certainly steps you can take today to get the process started for boosting your score: Click here to learn more about credit repair.
Minimum down payment is 3.5 percent
For most borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of the home.
While you’ve likely heard of other programs that offer lower down payment options, the bulk of those programs have strict qualification guidelines and are available in limited areas. FHA loans by far offer the widest range of approvals for low down payment loans.
In fact, one of the lesser-known features of FHA loans is the allowance for family members to gift cash for down payment, or even government grant and down payment assistance programs.
Closing costs may be covered
Ooops! Did I spoil the surprise by jumping ahead on this one? Well let’s go ahead and expand on this anyhow. See, it’s not just family and government that can get in on the action of covering your closing costs.
Home sellers, builders, and even lenders are allowed to contribute. When we talk about closing costs, we’re referencing: Appraisals, credit reports, title fees, and more. It really is quite a nice touch having the ability to show up to closing with minimal out-of-pocket.
You can borrow cash for repairs
Here’s another handy feature that few borrowers are aware of. FHA has a special program for borrowers who need extra cash to make needed repairs to their homes.
It’s called a 203(k) and the primary benefit is that your loan amount will be based on the projected value of your home once the repairs are complete, instead of the current value.
This is quite significant and allows you access cash with favorable lending terms. If the repairs are nonstructural in nature (New cabinets, fixtures, a fresh coat of paint for example). then FHA offers a “Streamlined” option that will finance up to $35,000.
Financial hardship relief allowed
Of course, FHA insurance isn’t supposed to be an easy out for borrowers who are unhappy about their mortgage payments.
Imagine the scenario where your loan provider offers you temporary interest reduction or even no interest at all? Or how about an offer to modify your loan to even more favorable terms… Or even a temporary forbearance?
These offers and more have been known to happen as watch FHA insurance “do its thing”… While I can certainly see a hand-full of folks might try to take advantage of this amazing feature, the service has helped countless families across the country who have found themselves in a tight situation.
With an FHA loan, you have an ally you can tap into when things get tighter than usual!