So, finally, you have decided to buy a home. Thanks to FHA that has become a name synonymous with first time home buyers in the United States. Offered by the FHA-approved mortgage lenders and insured by the Federal Housing Administration, this loan allows one to fulfill his or her dream of home ownership.
However, as there are various myths about FHA loans floating around on the market, you might like to be familiar with the reality before you opt for first time home buyer programs with low credit scores in Houston, TX. To help you, here we have listed down the most common myths that you should not pay heed to:
· You have to put down a hefty down payment
The concept is wrong. The minimum down payment for a conventional loan program is at least 5% while 20% is considered to be a standard down payment. This makes home buyers believe that they have to put down the same amount of down payment, even when they choose an FHA home loan program with low credit.
But in reality, you will get an FHA loan for as little as 3.5% down payments. Besides, you can fund the down payment by a gift from a friend or family member. And so, you can get a home loan with a little money out of your pocket.
· FHA home loan rates are too high
It is not true at all. This is not true at all. Homebuyers believe that rates on FHA loan programs have to be high as with this, they are able to get a home loan with bad or low credit score. What people forget to keep in mind that FHA guarantees the loan against default. If you fail to pay the loan n time, the lender forecloses, and FHA reimburses the lender for a large amount of the outstanding balance.
And for this, the FHA lenders are willing to keep the mortgage rate low. Wondering, how low? Often times the rates are lower than conventional home loan programs. So, there is no point of believing that you have to pay a huge loan rate when you choose an FHA loan.
· It is difficult to get an FHA loan
You would be surprised to know how flexible it is to qualify for an FHA home loan. If your credit score is as low as 500, you can still get an FHA loan. It will be a little difficult for you, but it will be possible. If your credit score is 580, you may be able to get 3.5% down payment as well. For those with 620 or more than that credit score, getting an FHA home loan will be very easy.
The most important thing that the FHA wants to check is not perfect credit but to see that you are back on a financially sound footing, as well as have the income to pay the mortgage and other bills. And so, you can easily buy your own home sooner than you think.
As the reality is now clear before you, without waiting any more, opt for an FHA-approved lender and apply for a home loan.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.