If you are looking for a home loan but have a lower than average credit, then an FHA loan can help you in buying the home of your dreams. The Federal Housing Authority (FHA) guarantees the loan which is then provided by approved lenders. Today, the FHA loan is a popular choice amongst home buyers in Texas over conventional loans, and there is reason to state why.
Why an FHA Loan is What You Want
FHA loans help promote the real estate and housing industry in a region, but there is more to it than just low rates. FHA loans have significant advantages over conventional loans, some of which include:
- Lower FICO credit score
- Average income earners can easy get the loan
- Down payments are lower – 3.5% down payment is what the FHA has set, but some lenders can ask for 10% down payment, while conventional loan down payments can go up to 30%
- Lower debt-to-income ratio
- People experiencing bankruptcy or foreclosure can also qualify, but under certain terms and conditions
- Upon selling your home, the new buyer can assume the mortgage
- More flexible and accessible
What Are the Requirements?
Generally, an FHA loan like is much easier to secure and refinance than a conventional loan. The best way to secure an FHA loan is to first check with different lenders in your area to get the lowest rates and the most flexible terms. To become eligible for the loan, you will have to show:
- Steady employment and income
- A moderate FICO credit score – 580 is the minimum, while 620 is what most lenders will ask for
- Average debt-to-income ratio
- Verified Social Security number
- Home or property you intend to buy should be appraised by an approved FHA appraiser
- Property you intend to buy should meet the quality standard and functions of other properties in the locality to get approved an FHA appraiser
Can I Refinance?
The FHA also provides refinance mortgage if you have lower the monthly payments on your FHA mortgage loan. You can also get cash out of up to 85% of the home value on an FHA loan. You can easily secure an FHA loan with no maximum limit in Texas on the following types of properties:
- Single family homes or condos
- Duplex living units
- Triplex living units
- Fourplex living units
As you can see, an FHA loan can help you in buying a home you always wanted. Contact mortgage lenders in your area and get to know how they can help you in securing a home loan.