There are different features, benefits, and processes as it relates to mortgage loan products. Certain loan products are designed to help provide affordable mortgage loans to homebuyers. FHA loans are an example of this type of product. While conventional loans and other government backed mortgages typically have more stringent qualification requirements, FHA programs offer benefits to provide a more affordable loan option for people that need may it. Here are some of the benefits of an FHA mortgage.
Lower Down Payment Requirements
Mortgages insured by the Federal Housing Authority (FHA) require a smaller down payment amount than most loan programs. Depending on your credit score, your down payment could be as low as 3.5%. There may be instances where you are required to put a larger down payment if your credit score is on the lower end of the acceptable range. However, the down payment requirements for FHA loans are typically still less than many other loans.
Lower Credit Score Threshold
The credit score requirements for a conventional loan are usually higher than the requirements to qualify for an FHA loan. If you’ve had credit problems in the past, or are just now establishing credit, it can be difficult to reach this threshold needed for a conventional loan. For this reason, an FHA mortgage is a great option and may help you to get you into a home quicker!
Great for First Time Home Buyers
Because of less stringent down payment and credit qualification, FHA loans can be a great option for first time home buyers. Low fees and competitive interest rates are also a benefit.
Down Payments can be 100% Gifted
With an FHA loan, 100% of your down payment and closing costs may be a “gift”. Typically, there are restrictions on the amount of gifted funds you may use towards your mortgage, however that is not the case for an FHA loans. FHA does require that the gift come from a relative with no strings attached. The amount given as a gift can be used for down payment and closing costs. Any cash given, with no strings attached, for example, from a parent or relative can be directly applied to your down payment.
These are only a few of the benefits of an FHA loan. The most important step to take in the home buying process is to the find a knowledgeable loan officer that can Help you find the best mortgage to fit your needs.. For over 90 years Standard Mortgage (NMLS#: 44912) has been helping home buyers.