FHA loans or Federal Housing Administration loans are perfectly designed for borrowers with low credit scores. Still, many borrowers hesitate to apply for FHA loans when they have a bad credit score. Are you one among them? Keep reading to understand the benefits of FHA government home loans for bad credit in Texas and make the right decision.
- Low down payment, low-interest rates: FHA mortgage loans require a low credit score and a minimum down payment. Compared to other government-backed home loans, FHA loans can be secured if you have at least a 580 credit score and can make a 3.5% down payment. Though the requirements are minimum, lenders offer lower interest rates for FHA in comparison with other conventional loans. However, these loans still get approved if you have a credit score of 500. But in that case, you need to make a 10% down payment to qualify for the lowest mortgage rates.
- Affordable mortgage insurance: No one wants to pay a huge amount for mortgage insurance. Though it is believed to be an extra and unnecessary expense, it is also considered very important to improve the stability of homeownership. This is the reason why it is mandatory for borrowers whether with good or bad credit scores to make mortgage insurance payments. Now, if you are choosing FHA loans for buying your new property, you can enjoy a pocket-friendly mortgage insurance payment. That’s the only benefit you can avail of when applying for FHA loans.
- Non-occupant co-borrowers can apply: In many cases, borrowers fail to qualify for the home loan requirements and are thus unable to get approval. FHA loans enable borrowers to get rid of these headaches by bringing in co-borrowers. Co-applicants may or may not be the occupant but should qualify for the FHA mortgage requirements. FHA co-borrowers can be related to the primary borrower by blood, by marriage, or by law. For example, spouses, parents, children, siblings, aunts/uncles, and nieces/nephews. Even unrelated individuals who can present evidence of a family-type relationship can act as co-borrowers.
FHA loans are definitely the best option for borrowers having a low credit score and willing to pay a good amount as a down payment. So, if you are still looking for mortgage loan options, applying for an FHA mortgage won’t be a bad decision.
Get in touch with an approved lender and apply for the loan now.