The FHA Home Loan Program is becoming the most popular way to finance the purchase of homes across the nation. It has always been popular but have become more so in the last couple of years because of the problems in the housing market.
Conventional loans are becoming harder to get and the down payment required is 20% or more. Another problem with conventional loans is that credit has tightened and you need higher credit scores. This is why the FHA Home Loan Program looks so attractive to current homebuyers.
Here are some of the advantages of a FHA Home Loan.
1. You Can Get Qualified Easier.
FHA does not directly lend money to the homebuyer, what they do is insured the mortgage. This will give lenders the incentive to give better loan terms and make it easier for you to get qualified.
2. You Do Not Have To Have Great Credit.
In today’s housing market you need to have pretty darn credit to qualify for a conventional loan. You can qualify for a FHA Home Loan with less than perfect credit scores, even as low as 585 credit score. But most lenders will want a credit score of 620 or above. If you have had a bankruptcy in the past you have a better chance of getting a mortgage with the FHA Home Loan Program than a conventional loan.
3. Low Down Payment.
This is probably is the best advantage to a FHA Loan Financing. You only need a 3.5% down payment versus 20% or more for conventional loans. You really do not have the have the down payment, it can come from a family member, employer, or charitable organization. Conventional loans do not allow this.
There is an exception to the 3.5% down payment. Currently you only need $100 for a down payment if you buy a HUD foreclosed home. You can get more information on The HUD $100 Down Payment Incentive by clicking on the links at the bottom of this article.
4. Cost Less To Have A FHA Loan.
FHA Home Loan Mortgage has very competitive interest rates because they are insured by the Federal government. You need to compare their rates with rates of conventional loans.
5. What If You Can Not Paid Your Loan?
FHA loans can be used not only to purchase existing single family homes but also new construction homes, 1-4 family homes, and manufactured homes. It is very hard to get financing for manufactured homes with conventional financing.
FHA has been around a long time, since 1934. They have programs available to you that will help you save your home if you happen to run into hard times. And there are a lot of hard times going around in today’s economical times. They can help you to avoid foreclosure.
Remember, FHA does not provide direct lending nor does it set the interest rates on the loans. You need to shop around with different FHA approved lenders for the best terms and rates. The FHA Home Loan Program may be your best and only chance to get your dream home!