Are you ready to become a homeowner? It’s important to understand all of your options for financing your purchase. FHA loans have helped millions of Americans pave their way toward homeownership. An FHA home loan is a great alternative to conventional mortgages. It is insured by the federal government, which allows mortgage lenders to offer home loans with easier qualifications – and better terms.
When it comes to the FHA first time buyer mortgage, these types of loans are ideal for anyone who is making their first home purchase. They require less money down, have lower interest rates and do not require you to have particularly good credit.
Most Americans who are in the market for a new home rely on loans to finance their purchase. An FHA home loan is one of the best options for those who do not have the funds to purchase a house outright. These types of loans are backed by the Federal Housing Authority (FHA) and are available throughout the country to a variety of borrowers.
While searching for a first time buyer mortgage, it’s important to explore all of your options to ensure you are making the right decision. FHA loans offer several perks that may influence your choice.
Here are the top three reasons for financing your home purchase with an FHA home loan.
1. Low Down Payment: FHA loans allow you to put a lower down payment on the purchase of your home when compared to conventional loans. Typically, borrowers of conventional loans need to fork over 10%-20% of the cost of the home as a down payment, which can really add up!
With an FHA home loan, your down payment may be as low as 3.5%, saving you a large chunk of cash up front. The rest of the money can be bundled into the loan, which you’ll pay in easier-to-manage monthly installments.
2. Easier Credit Score Requirements: Don’t have a high enough credit score to qualify for other mortgages? Compared to conventional loans, which require a score of at least 620, FHA loans are available to borrowers with credit scores as low as 500!
3. Lower Interest Rates: With an FHA loan, you may qualify for a lower interest rate than the rate you’d get with a conventional loan. Interest is charged by the lender in exchange for providing the money up front. Depending on the specific lender and your finances, you may secure an interest rate as low as 3%!