5 Things First-Time Homebuyers Need To Know To Qualify For An FHA Loan
As a first-time homebuyer, you may be confused by the different types of mortgages. The benefits of and qualifications for each mortgage type differ. If you are trying to determine which mortgage will best suit your needs, you may want to consider an FHA loan.
What Is An FHA Loan?
A Federal Housing Administration or FHA loan is a mortgage loan that is insured by the government. They can be used to finance single-family homes, multi-family housing, and in some cases, mobile or manufactured homes.
Down Payment Requirements
An FHA loan only requires a minimum down payment of 3.5%, which is lower than a conventional mortgage, which usually requires at least 5%. FHA loans also have the added benefit of being more lenient on down payment rules. As such, you may be able to use money from other sources, such as a gift from family members, to fund your down payment.
The credit requirements for an FHA loan are typically less stringent than conventional mortgages. Your credit score can be as low as 580 to still qualify for the 3.5% down payment. You may be able to qualify even if your score is as low as 500. However, the down payment amount will increase.
Interest rates are generally competitive with other types of mortgages. Mortgage rates are tied to prime and vary depending on your credit score. Your mortgage loan officer will be able to tell you the rate for which you qualify.
How To Apply
Applying for your first mortgage can be a simple process if you choose the right lender. You may even be able to apply for your FHA mortgage online.
At First Home Mortgage, we specialize in helping first-time homebuyers determine which mortgage will best suit their needs. Our team has over 25 years of experience in the mortgage industry and is here to answer all of your questions. We would be happy to assist you in finding the perfect mortgage for your first home purchase. Contact Drew Gilmartin for more information on FHA loans or to schedule an appointment today.