Getting approval for a mortgage with a low credit might be difficult for you, as most of the conventional loans need a high credit score for approval. But with an FHA loan, you will not have to face such issues. Approved by the Federal Housing Administration, this loan has a lenient requirement. So, one can easily opt for this loan program and get the loan approval.
But before you apply for a First Time Home Buyer Programs with low credit scores in Houston, TX, you need to familiar with some basic facts about this loan. Here, we have put together a few for you –
The Federal Housing Administration sets some basic requirements to qualify for an FHA home loan program. You should be a resident of the U.S., and you should have a valid Social Security number. You should also work with the same employer for the past two years. Other requirements include being old enough to sign a mortgage in your state and other qualifications that are state-specific. These loans are only available for primary residences and you will need to come with at least a 3.5% down payment.
Ease of qualifying
Purchasing your first home can be financially difficult, especially if you are young and haven’t saved a lot for the down payment. An FHA loan helps ease the process because the mortgage is insured, making it a useful tool when buying a home of your dream. Residents in disadvantaged neighbors or those whose credit can also have an easier time getting approved for an FHA loan than for a traditional mortgage.
Low down payments
Typically, FHA loans need smaller down payments than conventional loans. Though you need a low credit for an FHA loan when compared to other loan programs, your credit score plays a significant role in determining how much down payment you need to come with. The lowest down payment requirement is 3.5%. The higher your credit score, the lower the percent you require for the down payment.
FHA approved lenders
The Federal Housing Administrator does not provide the actual loans. It only insures the funds. You need to opt for an FHA-approved lender to get the loan approval. There is no uniformity between these lenders, so things like interest rates, costs, and services can vary. Although interest rates for FHA loans are usually lower than conventional mortgages, it is still best to shop around to ensure you are receiving the best value.
Low or no closing costs
Closing costs including appraisal fees, credit reports, inspections, and broker commissions can really add up. However, these costs are usually lower with an FHA loan. The costs may even be covered by the selling party, such as the builder, as an incentive to buy. Discuss with your lender to decide what closing costs you may be responsible for.
As you are now familiar with the basic facts about FHA loans, without waiting any more, opt for an FHA –approved lender and apply for a low credit score FHA loan today.
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.