So you've started the arduous task of applying for a home loan only to find that an FHA loan is the best, or only choice for you. Don't let the official title frighten you. While an FHA loan may seem daunting, it really is much easier to understand than its name implies. However, there are some major features of FHA loans that do separate them from the pack.
Who Typically Needs an FHA Loan?
First time homebuyers or those who need help with down payments or closing costs are generally the best candidates for FHA loans. FHA loans are also a great alternative for those with shaky credit or established homeowners seeking to make their homes more energy-efficient. Do you want to buy a fixer-upper, but can't afford the repairs it requires? FHA allows you to build repair costs straight into your mortgage.
Where Do You Obtain an FHA Loan?
While FHA guarantees FHA loans they do not provide them, your lender does. As a result, FHA loans are available through most mortgage lenders.
However unlike conventional loans the FHA guarantees lenders, should you default on payments, they will cover your payments. You pay a monthly PMI (Private Mortgage Insurance) payment included in your mortgage for this protection. This eliminates risk to the lender and allows you to receive lower interest rates and reasonable loan terms. Consequently, those seeking FHA loans are often only required to put 3% down towards the purchase of their homes.
What Kind of Home Can I Purchase and How Much Can I Spend?
With an FHA loan, you may purchase single-family residences, multi-family homes, or manufactured homes. If you're interested in buying a condominium, FHA also offers a special condominium loan.
No matter what type of residence you're interested in buying, remember that there are limits to how much you can borrow with an FHA loan. If you plan on spending more than this limit a conventional loan may be a better option. However, FHA loan limits do vary significantly across the country and within states, so ask your lender before ruling it out.
Since 1934, FHA has helped countless Americans become homeowners. If you are a candidate for an FHA loan, remember that the actual process (loan application, approval, etc') is very similar to applying for a conventional loan. The benefits, however, can be quite different.
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So you've started the arduous task of applying for a home loan only to find that an FHA loan is the best, or only choice for you. Don't let the official title frighten you. While an FHA loan may seem daunting, it really is much easier to understand than its name implies. However, there are some major features of FHA loans that do separate them from the pack.
Who Typically Needs an FHA Loan?
First time homebuyers or those who need help with down payments or closing costs are generally the best candidates for FHA loans. FHA loans are also a great alternative for those with shaky credit or established homeowners seeking to make their homes more energy-efficient. Do you want to buy a fixer-upper, but can't afford the repairs it requires? FHA allows you to build repair costs straight into your mortgage.
Where Do You Obtain an FHA Loan?
While FHA guarantees FHA loans they do not provide them, your lender does. As a result, FHA loans are available through most mortgage lenders.
However unlike conventional loans the FHA guarantees lenders, should you default on payments, they will cover your payments. You pay a monthly PMI (Private Mortgage Insurance) payment included in your mortgage for this protection. This eliminates risk to the lender and allows you to receive lower interest rates and reasonable loan terms. Consequently, those seeking FHA loans are often only required to put 3% down towards the purchase of their homes.
What Kind of Home Can I Purchase and How Much Can I Spend?
With an FHA loan, you may purchase single-family residences, multi-family homes, or manufactured homes. If you're interested in buying a condominium, FHA also offers a special condominium loan.
No matter what type of residence you're interested in buying, remember that there are limits to how much you can borrow with an FHA loan. If you plan on spending more than this limit a conventional loan may be a better option. However, FHA loan limits do vary significantly across the country and within states, so ask your lender before ruling it out.
Since 1934, FHA has helped countless Americans become homeowners. If you are a candidate for an FHA loan, remember that the actual process (loan application, approval, etc') is very similar to applying for a conventional loan. The benefits, however, can be quite different.