#FHAwesome – Is an FHA Loan Right for you?

FHA Loans have a reputation of being costly, difficult, and covered in red tape. While that’s not true if you have the right lender, there are costs that come with the benefits of a low down payment and eased underwriting. Is an FHA Loan the right fit for you? Read on:

#whyFHA

FHA Loans make homeownership more accessible with an easy qualification process. You can be approved with a down payment as low as 3.5%, and those funds can be a gift. Plus, FHA credit standards are less strict than conventional loans, so you can qualify for a low interest rate with a credit score as low as 580. “FHA Loans are a great option for first-time buyers who don’t have a big down payment and have a higher than average debt-to-income ratio,” states Mike Dulla, president of United Home Loans. “It’s a forgiving loan program, so FHA is a great way to secure home ownership and get back on your feet from a credit standpoint.”

#FHAtruth

It’s true that conventional loan applications may demand a higher credit score, a larger down payment, and a lower debt-to-income ratio. FHA Loans, however, are backed by the Federal Housing Administration, so lenders take less of a risk if the loan defaults. This government insurance comes at a cost to the borrower. The current fee is 1.75% of the loan upfront and an ongoing monthly fee of up to 0.85%. This cost is rolled into the loan, and it can only be removed through a conventional loan refinance.

In the end, it’s a matter of loan eligibility, estimated time you plan to stay in the home, and what loan program costs the least in the end. “I would suggest anyone with a down payment of 10% or less consider an FHA Loan, regardless of credit history,” Mike Dull advises. “United Home Loans can run the numbers in every loan program and find the best fit, and many times FHA is a great option.”

For help determining the right loan for you, contact us below or at 708-531-8388.