FHA Home Loan Benefits
FHA Home Loan Benefits
FHA home loans have allowed people from all walks of life to become a home owner. Even if you have a less-than-perfect financial and credit history, FHA will help you secure a home loan. Finding a good and affordable home loan has been a challenge for many home buyers. To qualify for conventional home loans, you need to have a great credit history, lots of cash in hand and you will have to bear high interest rates.
In contrast, FHA home loans are very affordable and people with low income can also fulfil their dreams of becoming a home owner. The qualifying guidelines are lenient and flexible since these are backed by the Federal Housing Authority. Loans are provided by private lenders but the government protects them against all defaults. Even though some lender might adhere to strict guidelines to protect themselves from mishaps, most of them will work according to the minimum guidelines set by the FHA.
Benefits of FHA Home Loans
There are many benefits of FHA home loans compared to other conventional home loan programs and this is the reason why millions of people and families have chosen FHA home loans to purchase their homes. Here are some benefits which make FHA stand out from other home loan programs:
Low Down Payments
FHA home loans, like other government backed home loans like VA and USDA, requires a low down payment. Conventional home loan programs require a down payment that ranges from 5% to 10%, whereas for FHA home loans you would requires a mere 3.5% down payment. Low down payments means you can build home equity faster.
Low Mortgage Insurance
The mortgage insurance fee that the home buyers have to pay for FHA home loans is much lower than what they had to pay for other conventional loan programs. Low mortgage insurance means you will have to pay lower monthly payments. People who are capable of qualifying for conventional home loans can take advantage of this feature to save money.
Competitive Interest Rates
FHA offers a flat interest rate for all borrowers, so if you have low credit scores, you will not have to pay penalties. If you qualify for FHA home loans, you will be eligible to get the current interest rates. Ideally the interest rates offered by FHA are very competitive and this allows buyers with low income and credit scores to enjoy rates that they will never get from conventional home loan programs.
High Debt-to-Income Ratio
If you have higher monthly debt, you will not be able to qualify for most of the conventional loan programs, since they require very low debt-to-income ratios. On the contrary, FHA allows you to secure a home loan even if your debt ratio is higher. For FHA home loans the total monthly debt should be under 41%, whereas the cap for conventional loans is at 36%. This allows more people to qualify for FHA home loans.
Lenient Credit Guidelines
Borrowers with little or no credit have qualified for FHA home loans because of the fact that FHA has very lenient credit guidelines. FHA will offer financing till you have negative credit history. You will be able to secure a home loan from FHA even if you had bankruptcy or foreclosures. All these make FHA home loans very affordable.
Very few other home loan programs will allow home buyers to use gift funds as down payments, but FHA will allow you to use gift funds for paying the entire down payment. The down payment can be gifted by your employer, parents, relative or any government home buyer program.
With FHA home loans offering so many advantages, you can become a proud homeowner without hassles. To know more about qualifying for FHA home loans and FHA home loans benefits, get in touch with us over phone or you can also send us an email.