WHAT YOU SHOULD KNOW ABOUT FHA LOANS FOR FIRST-TIME BUYERS
Among the available first time home buyer loans, FHA or the Federal Housing Administration options are the most popular. Mortgage qualifications are getting tougher by the day and there is no respite whether it is the very first time for you or the umpteenth. Compared to conventional options Federal Housing loans do have certain advantages. You need to be eligible for certain requirements and should not have an existing mortgage with FHA. The rest will automatically fall into place.
Enjoy credit leniency
FHA takes pains to understand your personal situation and shows some degree of leniency with credit. Those having a history of bankruptcy will have to wait for two years after discharge date in order to become eligible. Those with late payments within distinct timeframes with commendable payment history later need not worry about loan approval in spite of such imperfections. Also, collections do not pose an issue. People with federal liens such as defaults or tax lien related to student loan will not be eligible for FHA though. When putting down minimum 3% you need to have 620 credit score only. For conventional loan, this is 720 or higher if you want to get the prime rates. Enroll yourself to first time home buyers program without further ado if you meet the criteria.
Quite competitive rates
This is another major advantage when you are out to buy your dream home for the very first time. This also means lower monthly payments. Due to low interest rates, pay less across the loan life cycle. Compared to fixed 30 year loan programs FHA also offers a low rate.
Low closing cash requirement
When you are purchasing your first home, you will hardly be able to meet the 20% down payment requirements, let alone associated closing costs. The leniency of FHA comes to the fore in this aspect as well. You need only to put down 3% of overall loan values for payment at closing. Family members can also offer a portion of the required funds as gifts. It allows for 6% seller concessions where the seller will be paying 6% of overall closing costs.
Ease of the application process
FHA shows high leniency regarding the eligibility criteria of the borrower especially when they are first-time buyers. You need to meet associated credit requirements with 3% down payment. You need to have a steady employment to ensure approval. The requirements are quite easy when one compares them to the conventional lending scenario.
High debt-income ratio
Another big advantage, it can help you realize your dream of purchasing a home. You will become eligible even if you have a credit card, car or a student loan. If you are sure to afford the associated payments, FHA allows 50% debt-income ratio. They will determine this by adding up the overall loan amounts that you owe including new mortgage proposed payments. Now they will divide this by monthly income for getting the percentage.
Remove all the hindrances from FHA first time home buyer loans; make your long-standing dreams come true by visiting the website FirstHomeBuyers.net.
ABOUT THE AUTHOR
Sophia Atkins is an expert when it comes to home finance services and allied aspects. She loves writing interesting articles on the topic, helping first time home buyers in making all the right choices when it comes to these purchases. She recommends Firsthomebuyers.net as the number one name to trust if you are looking for similar financial assistance.