Do you want to buy a home? Is it going to be your first home? Then, this big purchase may make you tensed and worried all day all. How to finance the home is the first question that will come to your mind. Well, there are various home loan options that can help you with this. But an FHA is the most advantageous one for you.
Insured by the Federal Housing Administration and offered by the FHA-approved lenders, you can get an FHA loan 500 credit score Texas. Are you still in doubt about whether to opt for this loan program or not? To clear your doubt and to help you make a wise decision, here, we have listed down a few benefits of this loan program.
- Smaller down payment
It is the lower down payment that makes an FHA loan one of the most popular mortgage options among home buyers. Borrower, who use this program can make a down payment as low as 3.5% of the purchase price or the appraised value that is less. On the other hand, with a conventional or regular home loan option, borrowers typically have to put down 5% or more. It makes the FHA program well-liked among homebuyers, who don’t have a lot of money saved up for a down payment that is often the case for first-time home buyers.
- Flexible qualification guidelines
Generally, the qualification criteria used for FHA loans are less strict than those used for conventional or ‘regular’ home loan options. It is due to the government insurance lenders receive through this program. Homebuyers who get turned down for conventional financing are often able to qualify for this loan program. Even if you have credit issues, you can qualify for this home loan program.
- Lower credit scores and debt ratios
If your credit score is too low for a regular mortgage loan, you might still be able to qualify for an FHA-insured home loan program. It is another key benefit of this loan program. While conventional loans need a good credit score, for an FHA loan it is much lower. Even if you have a poor credit score or as low as 500 credit score, you can qualify for this loan program. But as FHA does not offer the loan directly, you have to opt for lenders, who set their individual requirements, and so, it varies from a lender to another one. But if you compare overall, it is much lower than conventional home loan programs.
- Sellers pay higher closing costs
Another benefit of this loan program is the closing cost. This loan allows sellers to pay up to 6 percent of the loan amount to cover the closing costs of the buyers. But in conventional loans, sellers can pay up to 3 percent. It is a big advantage for most of the homebuyers. Most of the homebuyers, especially the first-timers can save enough money for a down payment; however, they have nothing else. An FHA home loan program allows sellers to contribute more to the closing costs.
As you are now familiar with the various advantages of an FHA loan program, you would like to apply for this loan program for buying a home. Then, what to wait for? Without waiting any more, opt for a reputable mortgage lender and apply for the loan today.
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.