Compared to the typical conventional mortgage, FHA loans are often a much better deal for the 1st time home buyer, both in the short and long term. Even with today’s low rates, many borrowers stand to get an even better deal if they opt to go through the FHA process. That’s true nationwide as well as for FHA Orange County, FHA Los Angeles, and FHA Ventura County loans. Here are some of the biggest “plusses” of going with an FHA loan.
1. More Leeway on Credit History
Often, FHA loans are “easier” to get than conventional loans. Lenders must still be diligent to ensure that borrowers are a good risk, and documentation (such as wages and credit history) will be required to back this up during the application process. However, these government-insured loan programs tend to be more forgiving of past problems of a first home buyer such as late credit payments, collections from federal liens such as student loans, and even bankruptcy. A higher-than-usual debt-to-income ratio is often OK, too. You can have a lower credit score and still qualify for an FHA loan, whereas you’d be locked out of a conventional loan.
FHA loan programs were designed to get people into homes, and typically the 1st home buyer hasn’t saved up the 20 percent down payment that used to be common generations ago, and is still required by many conventional loans. FHA loans can require just 3 percent down, plus closing costs, and they’ll also allow gifts from family members.
3. Geared Toward First Home Buyer
The U.S. Department of Housing and Urban Development (HUD) has entire programs designed to help people achieve the American Dream of home ownership. Besides special FHA loan programs, there are federally funded housing counseling agencies that walk the 1st home buyer through the process. HUD also partners with local homebuying programs and city and county housing and community development entities. There are lots of options. You can even buy a “HUD home” (several Orange, Ventura, and Los Angeles County properties are listed in the HUD home store) and HUD will cover many of your closing costs.
4. Competitive Home Loan Rates
Orange County loan rates, just like Los Angeles mortgage rates and those for Ventura County home buyers, are competitive for FHA borrowers, and are usually as good a deal as or better than conventional loans. You can take advantage of low mortgage rates while also enjoying the benefits of FHA loan programs. Ask your mortgage professional for details. He or she will connect you with FHA lenders.