FHA Loan Facts that Potential Homeowners Should Know

FHA Loan Facts that Potential Homeowners Should Know

Getting an FHA loan requires less rigorous standards and a lower down payment. For first time home buyers, this loan type is extremely popular to purchase Charlotte basement homes for sale. An FHA loan is insured by the Federal Housing Administration and requires mortgage insurance. However, there are features you should know ahead of time to determine if this product matches your needs. Read on for FHA loan facts that potential homeowners should know so that they aren’t caught off guard during the lending process.

Imperfect Credit is OK

The minimum credit score required for an FHA loan depends upon the type of loan the borrower needs. Generally speaking, it features a minimum down payment as low as 3.5 percent for those with a credit score of 580 or higher.

Borrowers with lower credit scores need to present a more substantial down payment for Providence Plantation houses for sale.

Closing Costs Be Covered

The FHA allows lenders to pay some of the borrower’s closing costs. However, if you choose to do this, lenders usually charge a higher interest rate on the loan. Comparing  the rates of competing lenders will help you find the best option.

FHA Approved Lenders Only

Since the FHA is an insurer, the borrower must choose an FHA-approved lender for the purchase of a house for sale in Ardrey. Again, it’s essential to shop around, as costs and services vary depending on the lender.

Two-part Mortgage Insurance

FHA loans require two mortgage insurance premiums. The first is the upfront premium, which is 1.75 percent of the loan amount. You pay this at the time you get the loan. You can finance it into the loan if you don’t have the funds. The second premium is the annual premium, which is actually due monthly.

What FHA loan facts that potential homeowners should know are new to you? Please share your thoughts!