One of the biggest hurdles that first time homebuyers face is saving up for a sizable down payment on a home.
An FHA loan provides a government-insured loan with flexible loan options. Even experienced homeowners may need to plan for a long time for a new home purchase. Fortunately, FHA loans may help some buyers get into the home of their dreams with a lower down payment.
FHA loans are mortgages backed by the U.S. Federal Housing Administration. Lenders, such as banks and credit unions, that provide FHA loans provide funding for home purchases while requiring a lower down payment. Buyers may get into a new home with as little as 3.5% down.
Using conventional loans, a lower down payment requires the borrower to get private mortgage insurance. This special type of insurance protects the lender just in case the borrower is not able to pay. The cost of PMI is added to the monthly payment until the amount of the loan reaches 20%. FHA loans, on the other hand, do not require PMI because they are backed by the U.S. government. Additional scrutiny is often required during the loan application process using an FHA loan.
Many of the same documents are required for an FHA loan that any potential lender will want to see: employment history, appraisal, debt-to-income ration. A few additional stipulations are also attached to the FHA loan process. Buyers may have to bring 3.5% of the purchase price as a down payment, more if they have a credit score below 580. FHA loans are only available for the borrower’s primary residence.
Credit requirements may also be lower for FHA loans, given other factors demonstrate that the borrower is able to manage their money responsibly. Each lender looks at individual applications and may ask for additional documentation or explanations. They are often able to work with buyers with a lower credit score or shorter credit history than in other situations.
Brian was great to work with. He responded quickly and answered all our questions to help us understand and feel comfortable with the process.
The guys at Brothers have done multiple purchases and Refis for me and they always come through! I highly recommend their services.
What a guy!!! Fast, effective and just all around great person. Highly recommend Brian!! Thanks again sir, very much appreciated!!!
Brian and Tina were so helpful and very knowledgeable in buying our home! Anytime we hit a bump in the road, always positive attitude. Highly recommend working with these guys.
Brian was so helpful! He was always quick to get pre-approval letters back. He made the process simple and easy!
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