Are you thinking about buying a home, but not sure what type of mortgage loan is right for you? FHA loans are becoming a popular option among first-time homebuyers, especially for potential buyers with less-than-perfect credit. Read on to learn more about FHA loans and find out if an FHA loan could be right for you.
What exactly is an FHA loan?
FHA mortgage loans have been helping people achieve the dream of homeownership since 1934. FHA loans are insured by the Federal Housing Administration, which is a branch of the U.S. Department of Housing and Urban Development, or HUD, and were established to provide financing for homebuyers during the Great Depression. These government-backed loans often have more attractive interest rates and less restrictive requirements for qualification. Ultimately, FHA loans have an easier approval process and make homeownership more accessible for buyers who may not qualify for conventional mortgages.
What are the benefits of an FHA loan?
One of the biggest advantages of FHA loans is that they allow buyers to make a smaller down payment compared to conventional loans. For instance, borrowers can qualify for an FHA loan with a down payment as little as 3.5%. Depending on the state they live in, homebuyers may also be able to combine the FHA loan with another down payment assistance program to lower their down payment even further. As a result, the FHA loan is an attractive option for home buyers who are unable to afford a larger lump-sum payment.
FHA loans also make homeownership possible for borrowers with imperfect credit. Potential buyers with a minimum credit score of 580 can qualify for an FHA loan with a low down payment of just 3.5%. Those with a credit score of 500 – 579 may also qualify for an FHA loan with a minimum payment of 10%.
Is an FHA loan right for you?
Buying a home is a one of life’s biggest purchases, but the FHA loan can make getting a mortgage more affordable and accessible. If you’re wondering what type of loan is right for your situation, River City Mortgage can help! Our experienced loan officers will guide you through every step of the mortgage process to help you explore your options and find the loan that suits your needs, whether you’re looking for an FHA loan or a conventional mortgage. We work to make the process as seamless as possible so that your home buying experience is a success. Contact us today to learn more or use our online application to get a quick, free quote.