FHA Purchase Loan
The FHA purchase loan is similar to a conventional mortgage except that the federal government insures and sets the guidelines for the home loan. Because the loan programs have government backing, lenders find it more appealing particularly for first-time buyers who struggle to qualify under conventional loan structures. Contrary to popular belief, FHA loan programs are not only available to first-time buyers and there are no income limitations. There do however exist loan limitations, which are pre-determined based upon the county in which the home resides.
One of the primary benefits of this mortgage option is the low upfront cost. FHA loans require just 3.5 percent for the down payment of a house, condo or townhouse. Another advantage of the FHA mortgage is its fixed interest rate, which is comparable with interest rates of other home mortgage financing options. Borrowers utilizing an FHA loan program will pay mortgage insurance on the loan, but FHA insurance is often more affordable than private mortgage insurance charged on low down payment conventional loans. A borrower’s credit score requirement is also less rigid than conventional financing and credit history doesn’t have to be perfect. Those with mid-range credit scores may qualify for the FHA loan program when they are denied conventional loans, because the government’s backing reduces the lender’s risk.
If you are looking for an affordable option for your mortgage and do not have a large down payment to put down on your home, consider the FHA mortgage program. Its affordable fees coupled with low down payment options make it a popular loan choice for many first-time buyers. Talk to a home loan specialist today to learn more about the FHA home purchase loan.