Do you want to buy a home? Are you a first-time homebuyer? Then, you can opt for an FHA loan program. Guaranteed by the Federal Housing Administration and offered by the FHA-approved lenders, this loan program is the ideal choice for first-time home buyers. It is because this loan program needs as little as 3.5% down payment and 500 credit score that is much lower than conventional home loan programs.
But before you look for an FHA-approved lender who can approve your loan application, you would like to know about how much home you can afford. This is where you would need an FHA loan calculator – it is an online tool that will allow you to know the amount of home you can afford based on other factors. But to get a result from an FHA loan calculator Texas, you need to enter some information. Do you know what these are? Here are the ones –
- Down payment
A 20% down payment is considered to be a decent down payment when it comes to a home loan program. However, it varies from a home loan program to another one, especially in case of an FHA loan. Besides, some lenders ask for a high down payment while others ask for a general one. Whatever be the case, you should keep this in mind that a high down payment enhances your chances of qualifying for the best mortgage rates. And so, it would be better for you to come with a 20% down payment. Your income and credit scores are two additional factors that will play a role in deciding your mortgage rate.
- Home price
The home price depends on four things – your income, monthly debt payment, credit score, and down payment savings. When go for buying a home, you may hear that there is a rule for percentage, and it is 36%. This means that you should aim to have a debt-to-income (DTI) ratio of about 36% percent when applying for a mortgage loan. The ratio will help your lender understand your financial capacity in order to pay your mortgage each month. The higher the ratio would be the less likely you can afford the mortgage. So, you should try to maintain a lower ratio.
- Mortgage rate
The mortgage rate refers to the rate of interest that is charged over the life of the loan. You can use the rate that a potential FHA-approved lender offered you when you went through the preapproval process. However, if you don’t have any idea of what you would qualify for, you can enter a probable rate through the existing rate trend that you got on the mortgage page of your lender. And you should always remember that there are diverse factors, including your credit score and the debt-to-income ratio that contribute to deciding the mortgage rate.
Besides, you may need to enter the loan term in the calculator. If it is not possible for you to enter the actual home price, down payment, mortgage rate or loan term, enter the best guess possible. And in place of using one calculator, use two to three calculators online to ensure about how much house you can afford through an FHA loan program.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.