In recent years, the FHA home loan program has become a less frequently used loan program for many who are looking to purchase a home.
However, the program itself, still has many outstanding features and while it is not the right fit for all homebuyers, it still makes sense for many potential homebuyers.
For someone with a smaller down payment, with less than perfect credit, with higher debt to income ratios and a host of other scenarios, the FHA loan program shines.In this article we will discuss some of the key reasons someone might consider the FHA loan program.
FHA home loans have more credit score flexibility and are more forgiving than conventional loans, when it comes to qualifications. FHA loans are often available down to a 580 credit score or lower, while conventional loans require at minimum a 620 credit scores. Low Interest Rates.
FHA home loan interest rates are usually lower than Conventional loan interest rates. Of course, FHA loans also come with mortgage insurance, but you will also be less penalized by the interest rate you receive on an FHA loan, if you have less than perfect credit.
Therefore, if you are making a smaller down payment on a home, it makes sense to look into both a conventional and FHA loan.
Low Down Payment
Speaking of low down payments, the FHA loan program still just requires a 3.5% minimum down payment and the entire down payment can also be given in the form of a gift from a family member.
Flexible Underwriting Standards
FHA home loans have more relaxed underwriting than conventional loans. FHA loans have only a three year waiting period after a foreclosure or short sale to obtain a new loan and only two year waiting period after the discharge of a bankruptcy.
In addition, FHA loans also allow for higher debt to income ratios than conventional loans, with approvals often allowed with debt to income ratios that exceed 50%.
Loans Are Assumable
Finally, one unique aspect of the loan is that FHA loans are assumable. If you took out an FHA loan at today’s low interest rates and decided to sell the home years down the road when interest rates were potentially higher, someone could assume your current loan at its current rate and not the potentially higher market rate in the future.
These are just some of the many unique benefits of the FHA loan.
As always, if you are looking to be qualified for a new home loan for the purchase or refinance home loan, please speak with a licensed lender such as Strategic Mortgage, to fully and properly pre-qualify.
For more information on current home loan programs and options for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: firstname.lastname@example.org or online at www.strategicmtgaz.com
Vasilios Kamboukos – NMLS#160440