FHA Home Loans for first time home buyers
Most realtors recommend FHA home loans to first time home buyers because they are more secure and government backed loans. The mortgage interest rates are also lower than conventional loans and in most cases; it is either an adjustable rate loan or a fixed rate loan.
There are more leniencies if your credit score is not the best because this is not a criterion. The highest origination fee that any first time home buyer would have to pay at the time of purchase is 1% and there is more control on the amount of closing cost that you can be charged.
Things to consider when Appling for an FHA home loan
At the time you are purchasing your first home and considering a FHA home loan, you must know that only 97% of the loan will be financed. This means that you have to come up with about 3% of the sales price toward the down payment. You are allowed to use gift money or possibly private down payment assistance, but it must be deposited into a bank account for a certain period of time.
The average income requirement is lower. For those who have had any type of bankruptcy on their credit report, you will be able to apply for a FHA home loan after two years of filing your bankruptcy. If you are not a first time home buyer and have filed for foreclosure, you are eligible to buy a home after three years. A home eligible for this kind of loan would be a 1 to 4 single family home.
FHA Home Loans can also be used to refinance your property after you have purchased your home as well as for the purchase of an investment property. It has become easier to get a home in this economy because housing prices have dropped tremendously. With so many foreclosures, it is the best time for first time home owners to purchase and get a good deal.
The reason why FHA home loans were created was to help individuals who could not buy a home under normal circumstances using other traditional means. It allows anyone to own a home because the requirements are not as stringent. The debt to ratio for income and expenses allows for higher expenses and lower income. It has made it more attractive for individuals to own their home because of all the advantages attached to this loan program.
Most traditional banks ask for specific cash reserves to be in your bank account while FHA home loans program does not hold you to that. In other words, it is not a mandatory requirement. The seller is also allow to give you credit for up to 6% of the sales price. This is a contractual agreement that can be worked out between you and the seller towards the buyer cost.
If you are a first time home buyer or want to upgrade your current home to a bigger home, then FHA home loans is highly recommended to decrease the cost of owning a single family home.
Here are some important things to remember
1. FHA Home Loans are great for first time home buyers
2. You can use money given to you by a relative as part of your down payment,
but it has to be deposited in a personal bank account.
3. Credit scores are not contingent on qualifying for a FHA loan
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