Programs for first-time home buyers provide attractive financing terms.
Knowing where to find money for a down payment and for closing costs is important.
Local lending professionals can help you apply for an FHA mortgage loan.
Low Down Payment Requirement
A low down payment is one of the best benefits of an FHA mortgage loan.
Prior to the establishment of the Federal Housing Administration, home buyers were required to make a down payment of 20 percent or greater.
This means that a $60,000 down payment (20%) was needed for a $300,000 home purchase.
Now, if you secure an FHA mortgage with the same purchase price, you’ll need $10,500, representing a 3.5% down payment.
The down payment amount is $49,500 lower versus traditional mortgage loans.
Closing costs will also be needed, regardless of the type of financing that you select.
However, the low-down payment benefits of an FHA mortgage are ideal for first-time home buyers who aren’t using the proceeds from an existing home sale for a lump-sum down payment.
FHA Mortgage Loans Offer Relaxed Credit Requirements
With less than perfect credit, you might be eligible for an FHA mortgage loan.
Many loan programs require applicants to have timely paid consumer bills and a 620 credit or greater.
You could receive a credit approval through the FHA with a 580 credit score, and with a 10% down payment or greater, you might be approved with a credit score that’s as low as 500 points.
Since money for a down payment, closing costs and financial reserves are among the top barriers to entry for first-time home buyers, an FHA loan could be an excellent mortgage solution.
High-Debt Ratio Approval
Traditional mortgage loans have fairly rigid credit and debt-to-income requirements.
However, higher debt-to-income ratios are available for FHA mortgage loans versus conventional mortgage guidelines.
An FHA loan permits borrowers to have a higher front-end ratio for their housing payment and a higher back-end ratio for their consumer debts than traditional loan programs allow.
In some cases, you might secure an FHA mortgage approval with a back-end debt ratio that exceeds 50% of your gross monthly income.
Need Immediate Mortgage Solutions?
While certain cookie-cutter loan programs have strict approval requirements, an FHA mortgage loan offers greater flexibility.
Whether you have less than 20% for a down payment to buy a home, a below-average credit score, a high debt-to-income ratio or a combination of these three items, you might be eligible for an affordable mortgage loan.
Contact ASJ Mortgage Solutions today for more information or to apply for an FHA mortgage loan.Questions? Contact ASJ Mortgage Solutions Today!