Flexible Credit Guidelines - Fha Loans

Buying a Home? An FHA Loan Could Help You

Purchasing a home – especially for the first time – can be a difficult process. From finding the perfect home to managing all the moving accommodations; it can make the mortgage loan process seem harder than it is.

New homeowners often experience extra stress when trying to finance their home, but the process faster and easier than ever. With lenient lending guidelines and advancements in processing technology, navigating through FHA financing can get you into your dream home with little to worry about - and you don’t have to be a first-time homebuyer. 

The Perfect Loan for You

If you’re considering buying your first home and lack an immaculate credit score, why not consider an FHA loan?

FHA loans are backed by the Federal Housing Administration and available through approved lenders. What does this mean? Mortgage lenders are more likely to approve mortgage loans for borrowers with less than perfect qualifications. Thanks to funding from the UFMIP and MIP, borrowers who are not otherwise able to qualify for conventional mortgage financing still have access to mortgage loans at great low rates.  

Benefits of FHA Loans

FHA loans offer some hefty benefits for those who qualify.

1. Lower down payments. If you don’t have an excellent credit score, don’t worry. FHA loans offer some of the lowest down payment options, even for those who don’t have great credit.

2. Lower credit scores. FHA makes mortgage loan qualification easier by not requiring any minimum credit score.  

3. Easy refinancing. The FHA has a streamlined process, making it faster and easier for you to refinance.

4. Assumable loans. If you’re looking to sell and your potential home buyer meets all the FHA loan requirements, they can assume your loan. This has the potential to make your house more marketable, so you wrap the selling process up.

If you’re a first-time borrower or homeowner, don’t assume that you won’t qualify for a great mortgage just because of a lower credit score. FHA loans are surprisingly flexible when it comes to income ratios and credit requirements. This flexibility makes it easy to qualify for a good loan without missing out on low mortgage rates.

Am I Eligible for an FHA home loan?

FHA offers mortgage loans for homebuyers and homeowners looking to refinance. Though they were originally created for low- to moderate-income borrowers, clients with excellent credit can still benefit from the lower interest rate, low down payment and low mortgage insurance cost that FHA loans offer. 

You may benefit from an FHA home loan if:

• Your DTI is higher than conventional lenders might allow

• Your credit score is lower than conventional financing requires

• Your down payment is less than 5% of the home purchase price

• Your refinance loan to value is greater than 95% of the value of your home

If you still have questions regarding potential eligibility or benefits, the best way to find out your status is to contact us directly. We can determine your eligibility using your specific scenario to let you know if this is the best loan  option.

What Else Do I Need to Know?

First, if you’re approved for an FHA loan, you’ll be paying two mortgage insurance premiums. One is an annual mortgage insurance premium (MI) and the other is an upfront mortgage insurance premium (UFMIP). Your premiums can be rolled into your loan, reducing out-of-pocket expenses. You may be able to avoid mortgage insurance with a conventional mortgage loan, but only if you’re able to afford a 20% down payment.

FHA loans do come with restrictions about the type of property you can finance. The mortgage loan must be for a primary residence, FHA will approve up to a 4-unit property with a low down payment under the right circumstances. 

Want More Information?

With plenty of options at your disposal, it’s important to pick one that’s best for you. Whether that is a Conventional loan, an FHA loan or VA loan, our team can help you find out if FHA is beneficial. Contact Us for more information.