Getting a first-time home mortgage is becoming increasingly difficult. The good news is you can still access FHA loans, which are easier to get and have more benefits compared to conventional mortgages. An FHA loan is a mortgage loan insured by the Federal Housing Administration.
Borrowers who qualify for this loan can enjoy a 3.5% interest rate if they have a credit score of 580 or higher. Individuals who make a 10% down payment can access the loan even if they have a credit score of 500-579. Worth noting is that the lower the credit score, the higher the interest rate you’ll get.
The FHA loan was introduced after a series of foreclosures and defaults. It was meant to facilitate easy access to affordable mortgages. FHA approved loans are insured to reduce the risk of loss in case a borrower defaults on mortgage payments. For you to qualify, Americanloans.com says you need to have:
Credit score
For you to be considered for an FHA loan, you need to have a credit score of 580 or higher. Other conventional loans require you to have a score of 720 or higher for best rates. Furthermore, if you had filed for bankruptcy, you can apply for an FHA loan after two years. If you made late payments and you paid promptly after that, you can also qualify for this loan.
Down payments
Unlike conventional loans that require up to 20% down payment, FHA loans only require 3% of the loan value to be paid at the closing.
Application ease
If you’re looking for a fairly easy and lenient loan, FHA loans are your best choice as long as you meet the credit requirements and have a steady source of income.
Mortgage rates in Salt Lake City change. Applying for an FHA loan guarantees you of competitive rates, meaning you’ll have lower payments each month. With the easy application process, FHA loans should be the first choice for potential home buyers.