An FHA loan is backed by the government and a reliable mortgage insured by the Federal Housing Administration (hence the name). While the government insures these loans, these are generally administered and underwritten by external (third-party) mortgage lenders. These can be used by new, as well as frequent home buyers who need to fulfill a minimum requirement. Obtaining these types of loans means you have to fulfill a minimum credit score and down payment requirements. It is a more favorable mortgage option than most conventional loans, which makes it the perfect choice for first-time home buyers. As a matter of fact, more than 80 percent of the FHA loans were obtained from borrowers coming in the category of first-time buyers. To get the best FHA mortgage for first-time home buyers, you must take assistance from an expert. This will allow you seamlessly navigate throughout the process.
In the next part of the post, we will deep dive into the numerous aspects of FHA mortgage options. This should give you a better overview of the same, helping you make an informed decision. Let’s now jump into the details right away!
To begin with, FHA loans come in two terms, 15 and 30 years. Something the home buyers need to be aware of is that both of these come with fixed interest rates. The agency you are working with may come up with flexible underwriting to help you, as the borrower, qualify for the same. That said, home buyers must pay an additional amount as FHA mortgage insurance fees. This is designed in such a way that the lender does not suffer an extensive amount of loss should the borrower default under any type of circumstances. The two types of mortgage insurance premiums that must be paid by the borrower are upfront mortgage premium and annual insurance premium. The premiums would be canceled after 11 years for a majority of the borrowers if they fulfill 90 percent or more of the value of the property.
Here are a few essential points on how one can qualify for an FHA loan:
FICO score of 500 out of 579 with 10 percent down.
Verified employment history for a couple of years.
Utilize the mortgage for financing a residential property.
Make sure the property is appraised by an agency that is approved by the FHA.
The property fulfills all the HUD guidelines.
Wait for one or two years before applying for the loan after bankruptcy.
Have a front-end debt ratio with no more than 31 percentage points of the total monthly income.
Consider this post, and make use of the best brokers for FHA first-time home buyers in Rockport or elsewhere. Make sure the broker is an established name in the market and has excellent online reviews.
