How an FHA Loan Can Benefit YOU

Purchasing your Colorado Springs home with an FHA home loan is a great way to finance a home with a low down payment, low interest rate and flexible lending guidelines.

Due to the fact that FHA loans are insured by the Federal Housing Administration, anyone qualifying for an FHA loan is typically able to bypass the stricter credit and loan-to-value issues associated with conventional loans.

Benefits of an FHA Loan

1. Smaller down payment: FHA home loans offer a low 3.5% down payment. If you are unable to provide this through your own funds, FHA does allow the money to be gifted to you by a family member, employer or charitable organization. Other loan programs don't allow this.
2. Less than perfect credit: FHA does not require perfect credit. In fact, if you have gone through a bankruptcy or foreclosure, the time before you are able to purchase again is much shorter with FHA than it is with a conventional loan.
3. Appraisal: In years past an FHA appraisal might have required cosmetic work to be fixed or repaired before you could close. The good news is that FHA dramatically revamped its appraisal focus several years ago and those cosmetic issues are no longer in play. This allows you the buyer more flexibility when negotiating the purchase price.
4. Non-traditional credit is allowed: Building a credit history through non-traditional means is allowed through FHA. Non-traditional credit includes rental payments, utilities, car insurance, cell phone, cable and other local stores that don’t report to the major credit bureaus.

What You Need to Know about an FHA Loan

1. FHA has loan limits – Each Colorado County has their own FHA loan limit on how much you are able to borrow. Check your county before determining your purchase price.
2. There are no income or geographical limits for FHA financing (there may be for your local first time homebuyer down payment assistance programs)
3. Sellers can contribute up to 6% of the sales price towards your closing costs
4. Mortgage insurance is required to insure your lender against default

There are several things you are able to do to make sure your FHA loan approval moves as quickly and as smoothly as possible. Deliver your loan documents for preapproval as fast as you can to your lender, work with a knowledgeable FHA loan specialist, and try to be available as much as possible when your lender calls with a question or need.

To learn more: Check out our FREE Top 20 Homebuyer Secrets that can save you thousands of dollars! Plus browse our Home Buying Resources section and fill-out a free no-obligation secure online application or call us in Colorado Springs, Colorado at 719.387.1368 with any questions.

How an FHA Loan Can Benefit YOU was written by Rebekah Radice.