The Federal Housing Administration offers mortgages for first-time home buyers as well as for families that have an income of below a specific level required to qualify for the program. The FHA mortgage programs offer several benefits to people that qualify, providing the opportunity to own a home, even with a lower income or with a less than ideal credit score.
The program, which also may be called an FHA loan, is designed specifically to increase the ability of individuals and families that meet the specific criteria for the program to move from renters to homeowners. It is seen as one of the best mortgage options for those who will not qualify for a conventional type of home loan.
Down Payments and Credit Scores
Many first-time home buyers lack the funds necessary for a large down payment on a home. Additionally, as they do not currently own a home, they are caught in the cycle of trying to cover the cost of rent while also saving for the down payment.
Through an FHA mortgage, buyers can have the option to put down as little as 3.5% for the purchase with fixed and ARM conforming loans of up to $636,150. This will be determined based on the application information.
The other very big advantage is the low credit scores that will qualify for the program. Applicants will need at 580 or higher credit score, while conventional lenders will typically set minimum credit score at 620 or higher.
Rates and Cost Savings
With the FHA mortgage, home buyers can take advantage of lower rates than will be offered with most conventional types of loans. The FHA loan rates will become very competitive for those buyers with credit scores in the mid-600s.
Keep in mind that the FHA loans will also provide the option for up to six percent of the loan amount to be paid by the seller to cover the buyer’s closing costs. This, along with underwriting flexibility, makes this a loan option that is a good choice for many buyers.
To find out more about the benefits of an FHA mortgage, talk to the loan experts at Guaranteed Rate.