Low Down Payment? Poor Credit? FHA Loan Is Your Home Mortgage Solution
Mortgage rates are starting to inch up across the country. If you have been waiting to purchase your new home using a mortgage for bad credit, you should look to speed up your home buying process. Instead of waiting to qualify for a bad-credit home loan, look at using an FHA loan instead. There are many advantages to FHA loans that allow many people with poor or bad credit to purchase a home. Find an FHA loan specialist online to assist you in qualifying.
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Benefits of FHA Home Loans
Here are some compelling reasons to consider FHA financing.
- Low down payment. FHA requires a down payment as low as 3.5%. Qualifying for a bad credit mortgage typically requires a much larger down payment. With the small down payment required for an FHA home loan, you can use the money that would have gone toward a down payment to rehabilitate and repair your credit.
- Higher loan limits. In 2008, Congress raised the loan limits on FHA loans. In many areas of the country, FHA loan limits go as high as $729,000--again, with only 3.5% down. Loan limits vary by region, so check with your FHA home loan specialist for the limit in your area.
- Lower qualifying credit scores. FHA mortgage guidelines allow for borrowers with bad credit. FHA mortgage rates are comparable to rates for conventional mortgages that require higher credit scores.
- Co-borrowers are allowed. FHA mortgage guidelines allow applicants to have co-signers on the loan who will not be occupying the home. This allows parents to assist their children become homeowners, for example. Using the income and credit of the co-borrower as part of qualifying is often enough to move applicants from a bad-credit mortgage to an FHA mortgage.
- Better interest rates. Because FHA mortgages are federally insured through mortgage insurance payments, the risk to lenders is reduced. Because lenders' risk is reduced, FHA mortgage rates are better than rates for a bad-credit mortgage.
FHA Loans Increase Access to Home Ownership
The purpose of FHA loans is to enable home ownership. With lower down payment and credit score requirements, less stringent rules on co-borrowers to assist qualifying, and lower interest rates, FHA achieves its purpose for many home buyers. If you been working hard to save funds for a down payment on a bad-credit mortgage, it's possible you have saved enough for an FHA mortgage.
Get in touch with an approved lender of FHA home loans to determine your ability to qualify for an FHA home loan and guide you through the steps. With favorable home prices in the market, you may find yourself a homeowner sooner than you realized.