Top 10 Reasons to Choose FHA as a First Time Home Buyer

FHA Home Loans Are Easy to Get

Many people with poor credit may think they cannot get a loan. This is often not true. The US government uses the FHA program to help more Americans buy a home. More home owners is good for the US economy. If you have average or poor credit, you should look at applying through FHA.

FHA Loans Have Low Rates

How is it possible that a person with poor credit can get a low rate? FHA loans are backed by the government. So, lenders can risk giving loans at lower rates to people with lower credit scores. If you have poor credit, your best lender is an FHA approved mortgage company. They will provide you a rate that will surprise you in a good way.

FHA Loans Have Low Down Payments

Who says you need 20% down to buy a house? This is nonsense. With FHA, you may only need to put down 3.5%. That is a small amount that many people can easily afford with some financial planning.

There are few programs out there with a lower down payment. Only VA loans and USDA loans have 100% financing options and those programs have many restrictions.

FHA Loans Allow for Bankruptcies and Foreclosures

If you have a major negative credit history, you still may be able to get a loan through FHA. You would generally need to wait at least two years after a bankruptcy, and three years after a foreclosure to apply for an FHA loan. But you can always check and see if you can get approved sooner.

FHA Loans Have Reasonable Mortgage Insurance

Everyone hates mortgage insurance. But think about it: You are able to buy a home with a low-down payment at a low rate with poor credit! This is a reasonable tradeoff for most of us. Plus, you will find that FHA mortgage insurance declines as your mortgage amount goes down. If you ever want to get rid of FHA mortgage insurance, you can refinance into a conventional loan later.

You Can Get an FHA Loan With a 580 Credit Score

So many people think mortgage loans are impossible if you have a 600ish credit score. Wrong. With FHA, you can get a 3.5% down loan with only a 580-credit score! It is better to have a higher score because you will have a better choice of lenders, but you may be able to get that loan with a very low score and a low rate. Good luck getting that kind of deal with a conventional lender.

Get an FHA Mortgage with a High Debt to Income Ratio

FHA loans can be obtained even if you have a high debt to income ratio above 45% or more. This is really the best option for those with lower credit and a lot of debt.

You Can Get a Loan Being Self Employed

Who says you only can get a loan if you have a full-time job? It is easy to get an FHA loan with self-employment. You need to have been in the job for two years and need to show enough profits to support your debts and mortgage. But it really is a quite simple matter to get an FHA loan being your own boss.

You Can Get the Down Payment as a Gift

You don't even need to come up with the down payment yourself. How great is that? You can get the loan with the entire down payment coming from a relative or friend. This makes the FHA loan in some ways a 100% financing loan.

FHA Loans Are Assumable

This is a rarely known benefit. Your FHA loan can be assumed. This means if you want to sell, the buyer can qualify for your loan at your current rate. This is a great advantage in a rising interest rate market. If you have a 3.5% rate you locked five years ago, this will be very attractive to people who are staring at 5% rates. It makes your home easier to sell.

So, if you think you may not qualify for a loan, think again. The FHA program can really help you, and there are only a few downsides.

References: https://www.moneyunder30.com/fha-mortgage-loans

Top 10 Reasons to Choose FHA for Your Loan as a First Time Home Buyers