U.S. citizens have many options when it comes to mortgages. But the loan offered by the Federal Housing Administration (FHA) remains in high demand due to its numerous benefits. Primary Residential Mortgage, Inc. lists the following reasons many homebuyers prefer the FHA loan program:
Suitable for credit challenged buyers
FHA loans are very lenient to those with low credit scores. To get a conventional mortgage loan, you will need a credit FICO score of 620 or more. The required credit score for an FHA loan is only 580 or even lower. Even if you had filed for bankruptcy, you could still be given an FHA loan two years after the date of discharge. In case you had defaulted on your student loan, you would still be eligible for this loan.
In case you have little money for down payment
Raising a down payment can be a challenge. The down payment on an FHA loan is lower at 3.5% compared to 20% of other conventional loans. You can seek the assistance of local mortgage programs if they can help in raising your down payment. You can also use gifts from friends and family to offset part of the down payment.
An easy application process
The FHA loan program has a quick application process due to its leniency. You only need to meet the requirements on credit, have a 3.5% down payment and have a steady source of income for your application to be quickly approved.
You want to pay a lower monthly payment
The competitive rates for FHA loans allow you to pay lower rates every month. Since the interest rates are lower, your lifespan repayment for the loan will be minimal.
You have a high debt-to-income ratio
Even if your debt-to-income ratio is high, as long as you meet the FHA loan payment, you will qualify for the loan. The program’s allowed debt-to-income ratio is 50 percent.
FHA-insured loans give those who might have a low credit score, little money for down payment or a high debt-to-income score a chance to access a mortgage loan. If you are a homebuyer, take advantage of the loan benefits and get your new home with ease.