Are you a first-time home buyer in Spring Hill Florida? Thinking of realizing the ‘American Dream’ of homeownership through mortgage? Then you might want to consider the FHA Loan. Let’s talk a little about the FHA Mortgage 101 for First-Time Home Buyers
FHA loans are basically mortgages insured by the Federal Housing Administration. The administration was established by the Congress in 1934, to help home buyers with low income to obtain a mortgage, which they would otherwise have trouble applying and qualifying for. Though these loans are government-backed, they are not directly issued by the FHA; in fact, they are issued by FHA-approved lenders in the Florida. Let’s take a look at some FHA loan benefits for Spring Hill buyers below:
Benefits of FHA Mortgage to First-Time Home Buyers in Spring Hill FL
- Easy to Qualify
Generally, it’s not easy to qualify for a conventional loan, typically because lenders are worried about the associated default risks. But unlike conventional loans, getting a loan approval for an FHA loan is much easier, because these are government-backed, which protects lenders against defaults. This makes it possible for lenders to offer loans with competitive interest rates, even to those borrowers who have a lower credit score. As these loans are insured by the government, their credit qualifying guidelines are much easier than most traditional loans as well.
- Lenient on Credit Issues
The FHA is actually quite lenient on credit issues and blemishes on your credit report, which you might have due to late payments or a previous bankruptcy. Thus, you can apply for an FHA loan just after 2 years of your bankruptcy discharge date. And if you had late payments in different time frames and had a good history following that, then FHA-lenders are most likely to overlook your past and approve your loan request. Also, unlike conventional loans, which require a score of 680, to qualify for any financing over 95%, the FHA loan goes as low as 600 in some cases. Please note; your loan request may be rejected if you have had any federal liens, such as tax liens.
- Down Payment is quite Low (As Low As 3.5 Percent)
FHA loans have by far, the lowest down payment requirements. You only need to pay a 3.5 percent of the purchase price as down payment. It is significantly lower than the down payment required by traditional loans, which is between 5 and 10 percent. The only exception in Hernando County is certain locations around Spring Hill that are USDA Rural Housing approved. You can learn more about USDA loans here. Both USDA and FHA are perfect First Time Home Buyer program in Hernando County.
- Low Interest Rate
FHA loans are available at very competitive rates, equating to a low payment every month. And low interest rate means that you’ll pay that much less in loan installments and can save thousands of dollars over the life of your mortgage. The FHA is known to offer extremely lower rates as compared to a 30 year fixed conventional loan.
- Higher Debt-to-Income Ratio
If you have a high debt-to-income ratio, over 35% of your loan request will probably be rejected for a conventional loan, but you can still apply for an FHA loan. The FHA loan doesn’t let debt-to-income ratio act as a barrier between you and your homeownership dream. It allows borrowers to have a maximum debt-to-income ratio of 45+ percent. However, for those who have credit scores below 620, debt to income ratio should be not above 43 percent.
- Flexible Repayment Terms
FHA mortgage offers flexible repayment terms and options – a 30 year fixed rate mortgage an adjustable-rate term, making it easy for you to pay back the loan. In addition, borrowers will have flexible streamline refinance options available to them later in the event interest rates should go lower.
Now you know all the basics related to FHA loans, so make your homeownership dream in Florida come true with ease! To apply or learn more, please call FHA Mortgage Source at 800-743-7556
Homebuyers can also submit the quick Info Request Form on this page.