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Best FHA Loan Helps You Become A Homeowner

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You want to apply for an FHA loan then you need to find the best FHA lenders in your area. Everyone dreams of buying a home where he could live happily with the family. But it is not easy to save money to buy a house these days especially when it becomes challenging to earn a living. Conventional loans are a great way of financing, but no institution is willing to lend you money with a low credit score. In this situation, the FHA loans are helpful in making you the homeowner. So, find the best FHA lenders now. Today we will cover the following topics:

What is an FHA loan?

Financial institutions give loans to consumers for various purposes. Well, they earn a profit by lending money to the people as they receive premiums each month that includes the original amount and the interest as well. But they have certain requirements, and the borrower needs to fulfill all these requirements to become eligible for a loan. One of these requirements is to have a good credit score.

It means people with a low credit score can’t obtain a conventional loan. Then should they forget about buying a house? Of course not, they can get a house of their own through FHA financing.  It is a loan approved by the federal housing authority that makes you able to receive the amount for buying a house even if you have a low credit score and down payment.

The applicants who have a credit score of 580 or above can get an FHA loan for a 3.5% down payment. Consumers who have a credit score below 580 can obtain an FHA loan for a 10% down payment.

FHA mortgage

Advantages of the best FHA loan Program:

Below are the advantages of an FHA loan:

  • Smaller down payments:

The first benefit you get by applying for an FHA loan is the smaller down payment.  We have already stated above in the article that conventional loans have high down payment requirements as compared to FHA loans. Not everyone can afford to pay a high amount as a down payment, so they get attracted to the FHA loan for low down payment requirements.

For the borrowers below 580 credit score: 10% down payment and for the borrowers above 580 credit score: 3.5% down payment.

  • Flexible qualification rules:

The qualification guidelines of applying for conventional loans are quite stringent. But people can easily qualify for the FHA loans as it has the most straightforward qualification requirements. The FHA-approved lender will check whether the applicant is eligible for an FHA loan or not. Upon ensuring the eligibility of the applicant, he starts further processing.

  • Assumable loan:

Another benefit of the FHA loan is that it is assumable. It means that if you want to sell the house down the road, you can transfer the FHA loan to the buyer. It is necessary to know that the buyer also has to meet all guidelines set by the Federal housing authority. If he fails to do so, he cannot assume the loan.

  • Down payment gift option:

In many types of loans, you are allowed to get benefits from the down payment gift option. If we talk about the conventional loan, you are only limited to a certain gift amount. But in an FHA loan, you can have the entire down payment amount gifted to you by a family member or an approved donor. This is a great benefit for first-time homebuyers who do not have enough cash to pay as a down payment.

Disadvantages:

Well, everything has a different side as well. There are some disadvantages of FHA loans too. For example, you are making lower down payments, so you need to pay more private insurance mortgages. The loan amount you can obtain may differ from state to state so you may not buy the house you wanted because of the price issue.

But FHA loan is an excellent facility for low-income people who want to buy a house. But you need to contact the best FHA lenders to make sure you get the loan as soon as possible.